The tariffs that the Trump administration have proposed or imposed have created a lot of discussion in the agriculture community.The recent proposed tariffs with Mexico brought it into the purview of a cattle producer, like myself, as Mexico is a significant beef and cattle trade partner.Although this current proposal of a 5% tariff with Mexico has been scrapped at this time, I believe it is something that may resurface. We currently have a running trade imbalance with Mexico when it comes to beef and cattle.Cattle prices have seen a stagnation over the last several years due in part to packer consolidation as well as abundant supply.Domestic production has remained high contributing to high supply, along with a sustained trade imbalance with Mexico, which creates a stagnant market.
I see some globalists talking about how bad tariffs are. Some people who wouldn’t think of themselves as globalists have bought into this line of thinking.Many of us in the livestock industry are well aware, and prettycomfortable with the commissioned sales business. We will consign cattle or horses to a sale yard. We will pay this commission because of the infrastructure that auction provides that makes for a healthy market place. The benefits provided through housing the stock, keeping the stock secure, and having the infrastructure to load, unload, and present the stock to buyers makes the commission charged by the stock yard worth the money.
The burdensome taxes that U.S. producers pay including fuel tax, vehicle registration, sales tax, income tax, and property tax fund a system to move and protect commerce in this country.The American producer and taxpayer have paid for an infrastructure that makes the U.S. the most desirable market in the world. From the transportation infrastructure to the legal system and law enforcement that makes it a safe and efficient market for a product, the US taxpayer and producer has paid for it all.
The calves produced from my cows have paid for things such as schools, prisons, and food stamps, all things that contribute to the U.S. being a massive consumer of food products, and therefore a target destination for imports.Every foreign player that unloads product into the US benefits from this infrastructure that we pay for. We are the greatest market. As such, every collected tariff should go into an infrastructure fundand reduce the burden on the US taxpayer and producer—who is not only paying 100% of the fees, but also is trying to compete with these foreign players who have invested very little to make this the most attractive market.
As a conservative who wants smaller government it goes against some of our instincts to want to see the government involved in trade.Hypothetically a willing buyer and a willing seller will find a price they agree upon and both leave happy with no government intervention.Unfortunately, libertarian hypotheticals will not pay for the infrastructure and social safety nets that are now built into society.There are three options for producers to take facing this cost of production and foreign competition conundrum.
1. Fight through political advocacy to reduce the tax, regulatory, and cost of employment burden that we face.
2.Tariff imports to reduce the burden on domestic producers and taxpayers by having importers who look to benefit by the U.S. market contribute to our system.
3. Go out of business.
My advice would be to continually fight for number 1, use number 2 as needed in order to avoid number 3.
If you are going to consign a horse or a bull to the best sale in the world you are going to pay a commission. You foreign players want to sell your product in the best market in the world? You can pay a commission, time to invest a little and stop extracting.