Opinion: Rationale behind U.S. trade policy not always easy to follow

The Biden administration’s trade agenda, mostly forgotten after three years of COVID-19, inflation, war in Ukraine, brutality in the Middle East and a cantankerous Congress, recently surfaced, and wow, is it a mess.

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Both presumptive presidential candidates —Democrat Joe Biden and Republican Donald Trump — recently argued over how high U.S. tariffs should be on electric vehicles from China. Biden has imposed a 100 per cent import fee, while Trump claims a 200 per cent tariff is needed.

It’s a fight few saw coming. Biden, who spent years promoting free trade and electric vehicles, is now imposing trade barriers to keep out cost-competitive vehicles that many Americans can afford and want.

The protectionist move was all the more surprising given that, just four weeks earlier, the White House publicly poked Mexico, the country’s largest trading partner, after it made a similar move against genetically modified U.S. corn used in Mexico’s dough and tortilla production.

By itself, the GM corn ban in Mexico’s food sector is almost meaningless because white corn dominates its maize-centred food sector.

The bigger problem is that the same ban “called for (GM corn) to be phased out from other food products and animal feed,” Inside Trade reported May 8.

That’s an existential threat to the U.S. corn industry because, as Reuters reported, Mexico “accounts for 47 per cent of the current total sales of the U.S. Department of Agriculture’s full-year (corn) export forecast of 53.3 million tons for 2023-24.”

That’s not only big, it’s dominant. Mexico is easily the top (U.S. corn) buyer, with Japan a distant second at 14 per cent.

In many ways, Mexico’s stand against the flood of imported American GM corn, which it maintains harms both its domestic producers and its food culture, resembles the White House’s stand against Chinese electric vehicles.

Both see the need to legally defend sovereign markets and domestic producers against government-subsidized, global mercantilists like China and, Mexico believes, the United States. They point to government-mandated ethanol markets and subsidized federal crop insurance as clear proof.

Besides, they argue, no one is advocating against non-GM corn exports to Mexico, a massive, lucrative market to any corn-growing nation, America or others.

All of this confusing trade talk was not lost on the Senate finance committee, which held a mid-April hearing to rake U.S. Trade Representative Katherine Tai and the Biden administration over the legislative coals for not playing enough “offence” on free trade.

Committee chair Ron Wyden, a Democrat from Oregon, chided Tai for not initiating “formal trade talks for a free trade agreement anywhere.” His committee counterpart, ranking Republican Mike Crapo of Idaho, complained that the White House “has yet to take a single enforcement action against China.”

Little did Crapo know he would get his wish May 17 when, in a unanimous 4-0 vote, the U.S. International Trade Commission ruled “there is a reasonable indication that a U.S. industry is materially injured by … imports of … 2,4-D from China and India that are … subsidized by the governments of China and India.”

But trade policy, even with a finding as definitive as the ITC’s, is a roiling, rocky sea to navigate.

Shortly after the finding went public, the National Corn Growers Association said it was “disappointed that ITC did not listen to … farmers about … the adverse impact if countervailing or anti-dumping tariffs were imposed on the imported herbicide.”

Translation: The corn group is disappointed because the subsidized, imported 2,4-D from China and India — with subsidized crop insurance — helps members produce corn more cheaply for the mandated U.S. ethanol and now-under siege Mexican corn markets.

In other words, trade rules that make us money are good, but trade rules that cost us money are bad.

Well, I’m glad we finally cleared that up.

– Alan Guebert is an agricultural commentator from Illinois.