Category Archives: Trade Policy

Meanwhile, Back in Iowa

Soybean prices continue to collapse…

Source: ino.com, accessed 6/13.

Note that the peak was in early March, just as Mr. Trump hinted at Section 232 tariffs on aluminum and steel. This additional pain is unwelcome, given that even as of March, soybean prices were some 40% below their mid-2012 peaks.

From Progressive Farmer – Washington Insider today:

Anxiety Rising In US Farm Circles On China Trade
The U.S. has signaled it will make its intentions known by Friday on duties on some $50 billion in Chinese goods over intellectual property issues.

U.S. ag interests like the American Soybean Association (ASA) are planning a full-court press to try and convince the administration to not take actions that would negatively impact U.S. soybean and other ag trade as China has threatened to respond with retaliatory trade actions against U.S. products like soybeans and other ag goods.

It’s not clear whether the U.S.-North Korea summit was enough to have the U.S. willing to hold off on imposing sanctions against China. But there are also still likely other steps in the process before U.S. sanctions go into place.

The U.S. has to publish a formal determination on the duties in the Federal Register, with up to 30 days after that point for the duties to come into effect. Plus, indications are the Trump administration is studying taking up to another 180 days before putting the duties in place.

As a reminder, here is a map of soybean production.

Source: USDA.

EconoFact: “What is the National Security Rationale for Steel, Aluminum and Automobile Protection?”

From EconoFact, an update:

The Trump administration has implemented a number of trade related measures purportedly on the basis of national security. First, it invoked the seldom-used provision of the trade law to investigate whether imposing import restrictions for steel and aluminum is justified by national security reasons. The Commerce Department’s investigation concluded that imports of both metals pose a national security risk and subsequently the administration applied tariffs and quotas to both products. In a new investigation, the Commerce Department has started looking into whether imports of cars or automobile parts could impair U.S. national security.

Continue reading →

What Will Policy Uncertainty Be Tomorrow?

Below is reported Economic Policy Uncertainty through 5/31/2018, reflecting newspaper accounts through 5/30.


Figure 1: US Economic Policy Uncertainty index (blue) and centered 7-day moving average (bold red). Source: policyuncertainty.com accessed 31 May 2018, and author’s calculations.

As of 2PM EST, Dow down 1%, VIX up 6.69%.

Guest Contribution: “The Exposure of U.S. Manufacturing Industries to Exchange Rates”

Today, we’re fortunate to have Willem Thorbecke, Senior Fellow at Japan’s Research Institute of Economy, Trade and Industry (RIETI) as a guest contributor. The views expressed represent those of the author himself, and do not necessarily represent those of RIETI, or any other institutions the author is affiliated with.

On March 8th President Trump announced 10 percent tariffs on aluminum imports and 25 percent tariffs on steel imports. On April 2nd China retaliated by announcing tariffs of up to 25 percent on imports of pork, soybeans, and other products. The European Union is also considering retaliatory tariffs. This tit-for-tat conflict spawns uncertainty, raises prices of key inputs for downstream industries, forces companies to engage in time-consuming appeals to the government, and risks making American products toxic to hundreds of millions of nationalistic Chinese consumers. It is no wonder that Deardorff and Stern (1997) said that using tariffs to correct distortions is like performing acupuncture with a fork.

Continue reading →