As President Trump ramps up trade disputes with close allies, a growing chorus of US businesses is speaking out against the tariffs, citing concerns over prices, competition and regulatory hurdles. With key deadlines looming, can the White House balance its push for protectionism with the needs of its most influential corporate backers?
The shelves of American grocery stores are stocked with jars of St Dalfour strawberry spread and Bonne Maman raspberry preserves, some of the over $200m (£154m) in jams that Europe sends to America each year. However, try looking for American-made jelly in Europe, and you’re likely to come up short.
The US exports less than $300,000 in jam each year to the bloc. This imbalance is largely due to a 24%-plus import tax on fruit spreads that US companies face in the EU. JM Smucker, one of the biggest sellers of such products in America, blames this high tariff for the miniscule value of its exports.
The Tariff Conundrum
Tariffs are taxes imposed on imported goods and services by a country's government.
They aim to protect domestic industries, generate revenue, and balance trade deficits.
The World Trade Organization (WTO) regulates tariffs under the General Agreement on Tariffs and Trade (GATT).
Tariff rates vary between countries, with some imposing high tariffs on specific products.
For example, the United States imposes a 25% tariff on imported steel, while China has a 10% tariff on US soybeans.
Tariffs can impact consumers through higher prices, but they also help domestic industries compete globally.
US President Donald Trump’s push to deploy tariffs against close trading partners has generated anger and bafflement, while drawing warnings from economists about higher prices and other potential economic pain. Some businesses in the US have echoed these concerns, but Trump’s calls for tariffs are also channelling longstanding frustrations many firms feel about foreign competition and policies they face abroad.
Businesses Weigh In
Apple farmers raised the big disparity in import duties their fruit faces in countries such as India (50%), Thailand (40%) and Brazil (10%), as well as sanitary rules in countries such as Australia that unfairly block their exports. Streaming businesses flagged digital taxes in Canada and Turkey that they said ‘unfairly target and discriminate‘ against US companies.
The oil and natural gas lobby criticised regulations in Mexico that require partnership with the state-owned oil company, while the White House itself spotlighted uneven ethanol tariffs in Brazil (18%, compared with 2.5% in the US), car tariffs in Europe (10%, compared with 2.5% in the US) and motorcycles in India (until a few years ago, 100% vs 2.4% in the US).
Uncertainty Looms
With 2 April looming, there remains widespread uncertainty about the goals and scope of White House plans, especially as Trump launches a broadside of other duties. Even businesses seeking action on their own issues have expressed hesitation about the president’s tariff-first, ask-questions-later strategy.
A Delicate Balance
Tariffs are a crucial tool for governments to regulate international trade.
However, they can have unintended consequences on specific industries or communities known as niche issues.
These issues arise when tariffs disproportionately affect small businesses, local economies, or specialized sectors.
For instance, tariffs on imported steel may benefit domestic producers but harm companies that rely on foreign suppliers.
Understanding the balance between tariffs and niche issues is essential for policymakers to implement effective trade policies that minimize negative impacts.
The mismatch between the blunt tool of tariffs and the more niche issues firms want the White House to champion has led to a delicate dance, as businesses suggest tariffs in their own interest, while also hoping to avoid the repercussions of the kind of sweeping duties that Trump has suggested might be on the table.
For example, steel manufacturer NorthStar BlueScope Steel urged Trump to expand tariffs on steel and aluminium to parts, but asked for an exemption for the raw materials it needs. The lobby group for JM Smucker and other big food manufacturers warned against ‘overly broad and sweeping tariffs‘ that might end up making it more expensive for its members to import ingredients like cocoa.
A Divided Response
The impact of Trump's trade policy has been met with divided responses from various stakeholders.
On one hand, some countries have seen significant economic benefits from the renegotiated trade agreements, such as the US-Mexico-Canada Agreement (USMCA).
The agreement has increased access to Canadian dairy markets and improved protections for intellectual property rights in Mexico.
However, other countries like China have faced tariffs imposed by the United States, leading to a decline in exports.
Republicans, traditionally the pro-trade party, have stayed supportive of Trump’s strategy, even as tariff announcements have been blamed for the recent stock market sell-off and weakness in recent surveys of business and consumer confidence. At a recent hearing on trade, Representative Jodey Arrington acknowledged that there might be ‘some pain associated on the front end‘ but maintained Trump’s focus on the issue would create opportunities for his constituents.
The Tariff Debate
What are tariffs, and why is Trump using them? Is Trump right when he says the US faces unfair trade? The answers to these questions will have a significant impact on global trade and the economy.
