TRUMP’S TRADE WAR BEGINS: President Donald Trump took action Saturday to impose new tariffs on Canada, Mexico and China, as our Doug Palmer wrote, setting the stage for a trade war and retaliatory tariffs that could have a sweeping effect on the U.S. economy and farmers. The additional tariffs on Canadian and Mexican goods will be 25 percent, although only 10 percent on Canadian energy, a White House official said. The new tariff on Chinese goods will also be 10 percent, as Trump has promised. Economists say the possible North American trade war could hurt economic growth on the continent and increase inflation. The new duties take effect on Tuesday, but goods shipped before Saturday will not face the higher tax, the White House said. The White House issued the tariffs after failing to resolve Trump's concerns with the three countries over fentanyl trafficking, undocumented migration and the U.S. trade deficit. "Tariffs don't cause inflation. They cause success. Cause big success. So we're going to have great success. There could be some temporary, short-term disruption, and people will understand that," Trump said. More on that ‘short-term disruption’: Agriculture groups have warned for months that Trump’s tariff plans could put U.S. farmers in the crosshairs of retaliatory tariffs. Farmers for Free Trade Board President Bob Hemesath noted in November that Mexico, Canada and China are American farmers’ “three largest export markets.” Canada is a major source of fertilizer material imports to the U.S., meaning farmers will be immediately impacted by Trump’s plans and any retaliatory tariffs the Canadian government imposes. And Canada and Mexico are also huge trading partners of liquors and spirits. Many of the products Canada is targeting through its retaliatory tariffs, which go into effect tomorrow, are food and agricultural products like meat, dairy, eggs, citrus and spices that the country imports from the U.S. Fallout on the Hill: Farm state Republicans are backing Trump’s plans, defending the tariffs as a “negotiating tool,” though some have acknowledged that the fallout could impact farmers. House Ag Chair G.T. Thompson (R-Pa.) said in a statement over the weekend that the tariffs will be an “effective tool in leveling the global playing field and ensuring fair trade for American producers.” House Ag ranking member Angie Craig (D-Minn.) said in a statement that Trump’s trade war will mean higher costs for imported goods like oil, lumber, avocados, tomatoes, bell peppers, lettuce, broccoli and other produce that are typically imported. Zippy Duvall, president of the American Farm Bureau Federation and an ally to Trump and Capitol Hill Republicans, also said the tariffs would add “further stress” to farmers. Who to watch: No congressional leader is more at risk of getting caught in the crossfire of Trump’s trade wars than Senate Majority Leader John Thune. Trump’s actions over the weekend will force the South Dakota Republican to decide whether he will use his leadership perch to push back on a tactic that has given him and other agriculture-state GOP lawmakers heartburn or align himself with a burgeoning bloc of MAGA-tinged protectionists in Congress. Don’t miss the full story on Thune’s tight spot from our Meredith Lee Hill and Jordain Carney here.
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