By Dalton Henry, USW Vice President of Policy and Communications
A few Weeks Ago, a top appeals court ruled against the Trump administration’s imposition of so-called reciprocal tariffs under an economic emergency declaration. The ruling was simultaneously set aside as it was appealed to the U.S. Supreme Court. With the briefs process starting next week and oral arguments set for November, this timeline shows an understanding of the seriousness of the case and the court’s intention to move it quickly.
This case, brought by importers of goods, has been heralded by proponents as likely to bring “certainty to international trade.” While that may be true for importers, some products, or other commodities, an eventual Supreme Court ruling either for or against the Trump administration is unlikely to change much about U.S. wheat exports or customer relationships.
Lack of Reciprocal Tariffs on U.S. Wheat Exports
The primary reason for a lack of expected change is that wheat exports have seen relatively few negative repercussions from the administration’s reciprocal tariffs. A wide diversity of customers blesses U.S. wheat farmers and have yet to see direct retaliation from customers who were previously purchasing U.S. wheat.
The two places where the U.S. has seen threatened retaliation impact sales are Brazil and the European Union, neither of which is connected to reciprocal tariffs. In the case of the European Union, threatened retaliation is a response to the U.S.’s Section 232 tariffs on steel and aluminum imports. For Brazil, the threat to U.S. sales stems from Section 301 tariffs, which are separate from a standard reciprocal trade dispute. Neither of these situations is part of the review currently before the U.S. Supreme Court.
Trade Policy Looking Forward
On the flipside, if the tariffs were forced to be repealed, it is unlikely that the gains the wheat industry has made through the reciprocal tariff negotiations would vanish. The three most notable examples of improvements for wheat all seem likely to continue. Vietnam, Indonesia, and Bangladesh all run substantial and persistent trade deficits with the United States. Should the administration be forced to remove reciprocal tariffs, the focus on reducing those trade deficits will not disappear. Purchasing additional U.S. commodities is a straightforward way for these countries to reduce their deficits with the U.S. at a relatively small additional cost to their economies or businesses.
One last piece to keep in mind – regardless of the outcome of these court rulings, it is naïve to think that global trade policy will return to the point we were at 5, 10, or 20 years ago.
