Trade, Tariffs and Deliberate Confusion
Montana Cattlemen’s Association
Press Release
Release Date: September 2, 2025
Contact person: Gilles Stockton
(406) 428-2183
Email: gillesstockton
Trade, Tariffs and Deliberate Confusion
We are being poorly served by the debate on trade and tariffs. The President proclaims that there is no down side. The opposition insists that the meanest little tariff will trigger runaway inflation. The reality is much more complicated.
China, Canada, Mexico, Europe, and even tiny landlocked Lesotho have trade surpluses with the United States, but not because these countries engineered the trade agreements. If you were around in 1999 you will remember the massive demonstrations when the World Trade Organization held talks in Seattle. The delegates negotiating the trade deals had to hide behind barbwire to keep out the angry citizens demanding a seat at the table.
Those who did have big cushy seats at the table were the CEOs of the global corporations and the Too Big to Fail Banks. The so called “free trade” agreements were dictated by Wall Street, not China or teensy Lesotho. Wall Street’s agenda was to free big money to exploit the labor and environment everywhere in the world and have the American people pay for it. This was a bi-partisan assault and Presidents Bush and Clinton were all in. Among the very few prominent political figures who voiced opposition to the “free trade” steamroller was Ross Perot who famously prophesied that “… there will be a giant sucking sound going south.”
The enemy is not, therefore, the countries who currently enjoy a trade surplus with the U.S. but the corporations who engineered the trade rules so that they could offshore manufacturing but still benefit from access to our domestic market.
Many economists applaud “free trade.” They maintain that if every country focuses on what they do best than we would all be better off. It is true that it would be folly to grow our own bananas and coffee. But what about sensitive military technology? It most certainly would not be wise to depend upon China and Lesotho for materials critical to our national defense.
Determining what industries are strategic and therefore require a measure of protection is complicated. It doesn’t really matter if we import children’s toys from Asia, but what about pharmaceuticals and medical equipment? The pandemic proved that the “just in time” delivery scheme does not work in an emergency.
A responsible trade policy would protect strategic industries but also foster a level competitive international playing field for the manufacture of non-strategic goods. Such a responsible trade policy would provide long term consistency so that domestic industries can plan to build and expand factories. To be sure, we need to avoid the creation of monopolies. Competition, from foreign countries, can help to keep the domestic economy honest.
Agriculture is one of the industries that is strategic. We now import more food than we export. Some of that of course are bananas and coffee, but what about beef and lamb? From the very first agreement – the North American Free Trade Agreement – cattle and sheep ranchers were thrown under the trade bus. Subsequent treaties with Central and South America and with Australia and New Zealand opened the trade door even wider to meat imports. Most ranchers would be very happy if tariffs are placed on imported beef and lamb.
Corn, soybean, and wheat farmers have the opposite problem. The 1996 Farm Bill abandoned the commitment to control overproduction through supply management. Instead, grain farmers were deliberately made dependent upon exports. The result is that farmers are vulnerable from market disruption resulting from every climatic, conflict, and diplomatic hiccup the world over. The President’s erratic trade war is resulting in a lot of sleepless nights. What farmers need is a new farm policy that puts the needs of family agriculture ahead of the international grain cartel.
The way that the VAT (Value Added Tax) is accounted for in the trade regimes directly disadvantages American industry. A VAT is a national level sales tax and all countries except for the United States have VATs which are used to pay for basic infrastructure and public health care. The trade agreements allow each country with a VAT to reimburse manufacturers for goods that are exported to the USA and add the VAT to the price of American derived imports.
We, on the other hand, fund much of our infrastructure through local property and sales taxes, which according the “free trade” rules cannot be rebated. American manufacturers are required to pay local property and sales taxes. As for health care, we have elected to have that come from our employers instead of as a national public system. This makes employee health insurance a major cost component on everything manufactured in this country and is not reimbursable under the trade rules.
As a result, American manufacturers pay not only for our domestic infrastructure and their employee health care but also that of their competitors who have offshored their factories. Since the VAT amounts to between 15% and 20%, depending upon the country, it is totally legitimate to impose appropriate tariffs on imports because this would level the playing field. Tariff income, by rights, should go to reducing property and sales taxes on the local level. As for the disparity in health care costs, we should fix our grossly expensive, overly complex, broken health care system. Not only would that benefit domestic manufacturers it would be a relief for all of us.
This country needs an open public debate about trade- not more storm and fury. Consumers should not have to pay high tariffs on food that we cannot raise or goods that we will never be able to manufacture efficiently. That would be an unnecessary inflationary tax. What this country needs instead is a trade policy that is fair and consistent. One that puts the welfare of Americans ahead of that of Wall Street.