The February 20th Supreme Court of the United States (SCOTUS) ruling on tariffs was clear in its 6-3 majority decision to restrain the Administration from imposing tariffs. The Court concluded that the President was not empowered to apply the International Emergency Economic Powers Act of 1997 to impose tariffs. It was the decision of the majority that tariffs were effectively taxes and therefore the purview of Congress. The erratic imposition of tariffs on trading partners without any clear indication of a comprehensive strategy has impacted farmers and the U.S. agricultural economy. Tariffs especially if capricious result in retaliation and specifically impede exports of agricultural commodities where the U.S. is vulnerable.
The National Farmers Union stated, “Over the past year, tariffs have raised input costs, disrupted export markets and incurred retaliation against U.S. agricultural goods. In an already fragile farm economy, uncertainty has hit family operations hardest.”
Rep. Angie Craig (D-MN) the Ranking Member of the House Agriculture Committee welcomed the SCOTUS ruling although emphasizing the damage to farmers from reduced exports of agricultural commodities in the current season. She observed “Losses will take years to recover since markets have been handed to competitors like Argentine and Brazil.”
Scott Metzger, president of the American Soybean Association pointed to the double jeopardy of increased costs to farmers for imported fertilizer, seeds and pesticides coupled with declining export volume that has depressed unit prices. He stated “Moving forward, certainty and dependable market access will be essential for U.S. soy to remain competitive globally.” He added “We urge the President to refrain from imposing tariffs on agricultural imports using other authorities”
Despite the clear decision by SCOTUS, the Administration is pursuing alternative strategies to retain tariffs, the legality of which have yet to be tested. Congress has been remiss in imposing its constitutionally accorded authority over trade, encouraging the White House to adopt policies unhindered by restraint. Despite the SCOTUS ruling, it is anticipated that the issue with consequential and collateral damage will persist through prolonged litigation or until Congress exerts its authority.
Farmers have been placed at a competitive disadvantage with respect to their counterparts in Brazil, Argentina and other Latin American Nations with respect to supplying available markets. It appears that the Administration intends to reimburse farmers in tranches of public funding with an initial “bridging” amount of $12 billion to be followed by $25 billion. This will be at the expense of the national debt.
A fresh approach to tariffs is urgently required since White House policy has clashed with the law of unintended consequences. An “Eye-for-Eye” succession of tariffs will end up blinding all parties and generating hardship within the U.S. agricultural and industrial sectors.