News & Views

As of last Tuesday, President Trump imposed tariffs of 25% on all goods imported from Mexico and Canada. Canadian oil was excepted from the high duties, being charged a more reasonable 10%, probably as a favor to Midwest refineries who rely on Canadian oil. President Trump constantly tries to persuade the public that the exporting country will pay the tariffs, a gift to the US treasury, while his advisers, businessmen and pundits point out tariffs are paid by the importer, not the exporter, and are passed on to consumers.. The only cost to the exporter is lost business if consumers balk at the increased prices. The special tariff for Canadian oil is an admission that a 25% tariff would drastically increase prices for customers of Midwest refineries. Tariffs are necessary sometimes to protect essential domestic industries from cheap imports. But that is not the case with the tariffs on Canadian and Mexican imports. It is a bullying tactic to force changes in policies affecting immigration and drug cartels. There has got to be a better way. Mexico and Canada are our two biggest trading partners. Imports from Mexico in 2023 were $480 billion, and from Canada, $439 billion. A 25% tariff on $919 billion is nearly $230 billion extra USA customers would have paid in 2023. The effect at the supermarket is going to be especially costly. Forty percent of all the vegetable and fruits consumed in the US now come from Mexico. Write at least a ten percent inflation into your fresh produce budget. Sixty percent of tomatoes are imported, with Mexico capturing 86% of that. That means 51 % of tomatoes are imported from Mexico (0.86 X 0.6) All 2024 agricultural imports from Mexico amounted to $47.8 billion (B). From Canada--$29B. From Europe, which may soon be subjected to tariffs--$35.3B. US agricultural 2024 exports to those countries, which could be subjected to retaliatory tariffs were: Mexico--$30.1B; Canada--$29B; Europe—$7.2B; and China, now subjected to 10% tariffs, $25.7B. All of these countries import a lot of corn, soybeans and wheat, and retaliation would likely come in switching purchases to South America. American farmers, especially in the Midwest, could be big losers. And apple growers. Mexico takes 35% of the US apple crop. Suppose they switch to other suppliers. China is the biggest exporter of apples in the world. I’m sure they would be happy to supply Mexico with apples. The US imports ammonia from Canada worth over one billion dollars per year. A 25% tariff will add $250 million to farmer’s fertilizer  bill. Besides tariffs, corn and soybean growers who grow for the ethanol market may not get the help they need. Trump has not yet committed to allowing E15 gasoline to be sold during the hot summer months. (E15 evaporates more easily, and causes more ozone pollution in the lower atmosphere. The EPA is bound by law to prohibit E15 sales in the summer. Wavers are allowed in emergencies.) For the last three years, Biden’s EPA has allowed waivers to help lower gas prices. Trump has reduced restrictions for more information call: Terry 208-741-0824 or Colleen 208-202-8352!! around, as it is in the Midwest, so they can sell more corn and soybeans for ethanol. E15 has 2% less energy than E10, so should be priced 2% lower. However, you will get less mileage on oil-well drilling, expecting oil producers to respond by expanding supply and lowering crude prices. But crude prices have been lolling in the $70s since last May, and the incentive to increase supply is not there. Gas prices are probably as low as they are going to go. E10 gasoline, which contains 10% alcohol, is available everywhere and known as regular gasoline. Ethanol burns cleaner than pure gasoline, so most gasoline in the US is blended with at least 10% ethanol. Midwest farmers would like to see E15 blends available country-wide and year and will have to fill up more often. Net savings is debatable. Why would Trump hesitate to approve wavers? In 2019 his EPA approved E15 sales year-around. Oil companies oppose E15 blends because It reduces the amount of EO they can sell, and requires more storage tanks and mixing facilities. They lost the fight on E10. Hence they lobby against additional E15 sales.