5mo ago

Could tarriffs deflate some food prices?

The u.s. produces a surplus of staples, especially corn and soybeans that are exported mostly to China. If China does retaliatory tarriffs won't that lower demand for those staples and thus the price in the US? And theoretically couldn't that also reduce the price of downstream animal products since feeding them will be cheaper?

This assumes:

Food companies don't use the excuse of tarriffs to raise prices even when there costs go down
The government doesn't step in to back stop corn demand and buy tonnes of it to keep prices high. I know they did this with dairy in the 70s and 80s, not sure if they still do it.

3 comments

Short answer: no, and probably not.
They will. These publicly owned companies do not give two shits about the consumer outside the price the market will bear not being reached yet. Any opportunity to raise prices and produce a better earnings call will be taken... and this is no different.
The word you are looking for is subsidize and we do this to the tune of billions of dollars a year. Now tariffs can (help) pay for subsidies if done properly... but when you effectively create a scenario where nobody in their right mind is going to pay those taxes - you've shot yourself in the foot. What we now have is a surplus without a buyer - and higher costs on the producers (farmers / processors.) If you think that sounds bad .. it's because it is. Farmers operate largely on credit and very few (to my knowledge) can afford getting blown out any given year.
Put simply the clown in charge learned a word we wish to god he didn't... because he didn't bother learning anything else about said word. He still fervently believes that other nations are paying the tariffs and not his own citizens. This isn't even a difficult concept. It's so basic, in fact, that I'm reasonably certain it is still covered in grade school history.
Having a pet rock or goldfish determining our economic status for the next 3.75 years (+ !?) is legitimately a safer bet. I digress.
https://www.politico.com/news/2025/04/04/farmers-tariffs-trump-trade-war-00271146
Prices for major crops like soybeans and corn have plummeted roughly 40 percent since 2022 — partly because Trump’s first trade war reshaped the global market for soybeans, with Brazil and Argentina emerging as major competitors to the U.S.
Farmers have been Trump’s most loyal constituency and overwhelmingly backed him in the 2024 election. Now they could be one of the groups hardest hit by his trade war, potentially forcing a political reckoning in red states as small- and mid-sized farms struggle to stay afloat and big farms lose their export markets.
Prices for the foods you buy aren't based on just the costs of soybeans, wheat, and corn ... in a globalized economy like ours it is complex and prices are increasing substantially for the foods we import. The U.S. imports more beef than they export, the cost of animal products are likely to increase.
No way. They would rather burn it to drive up prices by increasing scarcity than set the precedent of lowering prices.