Tariffs and Retaliation in the US: Tax on exports
President Donald Trump increased tariffs against Canada, Mexico, China, and reimposed national-security tariffs on all US trading partners including the European Union. In the last trade conflict, US trading partners retaliated against US-imposed tariffs by targeting iconic American products like Harley Davidson motorcycles and Levi’s blue denim. This retaliation hurt American exporters and reduced their global competitiveness. The same story is likely to play out in 2025, as US trading partners have already announced and imposed retaliatory tariffs targeting $190 billion of US exports, including agriculture, American whiskey, and more.
Agriculture exports, such as soybeans and pork, faced retaliation in response to the first trade war. China in particular imposed significant retaliatory tariffs on US ag exports, and halted imports of certain products altogether.
Retaliation against ag producers resulted in export losses totaling more than $27 billion in 2018 and 2019. According to USDA estimates, China accounted 95 percent of the losses. The EU and Mexico each accounted less than 2 percent, and the rest came from countries such as Canada, India, Turkey.
American whisky exports were also subject to retaliation. The EU (then including the UK) placed 25 percent tariffs on whiskey exports, which remained in place until January 2022 in the EU and June 2022 in the UK, at which point the Biden administration reached agreements that also softened the US tariffs.
Prior to the retaliatory tariffs, American whiskey exports to the EU and UK totaled $702 million in 2018. Imports fell by a combined 27 per cent from 2018 to 2019, as tariffs were implemented, and by another 15 per cent from 2019 to 2020. If we assume (conservatively), that exports would not have changed, tariffs led to a loss of $649 million in US whiskey exports from 2019 through 2021. Whiskey exports remained depressed below their pre-
tariffTariffs are taxes imposed by one country on goods imported from another country. Tariffs are trade barriers which increase prices, reduce the amount of goods and services available to US businesses and consumers and place an economic burden on foreign suppliers.
Exporters lose income when they don’t sell their products. The government doesn’t compensate every sector that suffers losses. A renewed trade conflict will harm US exporters. As of March 13, China, Canada and the European Union announced or imposed retaliation against US exports totaling $190 billion.
10 and 15% tariffs on $13.9 Billion of US exports, including ag equipment and crude oil, effective February 1010 and 15% tariffs on $29.5 Billion of US exports, including agricultural products (effective March 10
Canada IEEPA retaliation
- 25 per cent tariffs on $20.8billion of US exports, effective March 4
- 25 per cent tariffs on $86.7billion of US exports, scheduled for March 23
- Planned tax of 25 percent
- taxA Tax is a mandatory payment collected by local, State, and National governments to cover the cost of general government goods, services, and activities.
- on electricity exports from Ontario to the US, currently suspended
- Canada Section 232 retaliation
- 25 percent tariffs on $20.7 billion of US exports effective on March 13 (including steel and aluminum)European Union Section 232 retaliation
Lift suspension of previous tariffs, with rates of up to 50 percent, affecting $8 billion of US exports scheduled for April 1 (including whiskey)
- Expand tariffs to an additional $20 billion of US exports scheduled for April 13
- As we learned in the first trade war, retaliation will exact harm on US exporters by lowering their export sales–and the US-imposed tariffs will directly harm exporters too. US-imposed tariffs may burden exporters through increased input costs. This can act as a tax on the exports. Rather than boost the competitiveness of US businesses, a trade war will increase costs and invite harmful foreign retaliation, making it harder for US-based businesses to compete around the world.
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