By Dalton Henry, USW Vice President of Policy and Communications

At the recent Latin American and Caribbean Buyers Conference, the U.S. trade policy presentation focused the use of tariffs and demonstrated how the trade deficit has been invoked as a political messaging point by every U.S. president for the last 50 years. That 50-year timing point wasn’t merely a coincidence – many of the tariff tools of the modern Trump administration’s policies date back to that exact time, and in a couple of instances, even further.

Despite their age, these underlying U.S. laws are quite relevant today to many U.S. wheat customers. While the tariffs, rates and impacts to the wheat value chain are have been in a state of flux, find below a quick summary of current tariff actions taken by the Trump administration and the impacts to wheat customers around the world.

Section 232

Often referred to as “National Security Tariffs,” Section 232 tariffs date to the Trade Expansion Act of 1962 and explicitly grant the U.S. president broad authority to adjust tariffs or otherwise restrict trade if it is determined that imports would threaten U.S. national security. The most commonly known tariffs imposed under this section have been on steel, aluminum and copper products. However, they have also been applied to semiconductors, pharmaceuticals, passenger vehicles, trucks and their parts. Overall impact to wheat trade has been minimal, with limited retaliation by U.S. trading partners.

Rather large exporters to the U.S. have largely sought to address underlying issues through negotiation of quotas, or bilateral agreements to reduce tariff rates or secure preferential access for their countries’ products. Canada has been the primary exception, where frustration over the Section 232 tariffs applying even to USMCA-compliant goods in some instances has resulted in retaliatory actions.

Section 301

These tariffs are named for Section 301 of the Trade Act of 1974. This law provides broad authority for tariffs to be applied in response to many challenges the U.S. identifies – even if the underlying challenge isn’t explicitly trade related.

These are most well known for being the underlying authority for many of President Trump’s tariffs on Chinese goods during his first term. For a 301 tariff to apply, the United States Trade Representative (USTR) must first conduct an investigation. In that instance, the investigation was into purported Chinese intellectual property theft.

301 tariffs are moving forward on three primary fronts worth watching during the second Trump term. The first is fees on vessels made, owned or operated by Chinese entities. While currently largely delayed, these charges raised a good deal of concern by agricultural exporters early in the Trump Administration as companies worked to identify exposure to fees and the breadth of vessels built or operated by Chinese entities.

The other two primary 301 investigations that USW customers are watching are more recent and target excess manufacturing capacity and lax rules or enforcement of rules restricting forced labor in supply chains. Tariffs from the forced labor investigation went into effect in late July, with many key USW markets landing in the 10-15% range, which was largely expected based on similar tariff levels in the Trump administration’s earlier efforts to implement “reciprocal tariffs” that were struck down by the U.S. Supreme Court. The 301 tariffs associated with excess capacity are likely to be additive and/or larger in scope for some countries, though the list of those targeted is much shorter.

301 tariffs will be worth watching through this summer and into fall, both as the excess capacity charges are made known and for the potential that additional 301 investigations or actions are taken in response to digital services taxes and similar trade irritants that have caught the Trump administration’s eye.

Section 338

Section 338 is one of the oldest trade laws the Trump administration has used – dating back to the 1930s and has seen much more rare use in the modern era. Their authority is limited to countries which discriminate against U.S. products and have become a tool of choice as the Trump administration escalated they efforts vis a vis Canada. As of this writing, proposed tariffs of up to 50% on Canadian alcohol, dairy and automotive products are currently in an intensive negotiation, having just been delayed by three days (until Friday, August 21) in an effort to reach a broader U.S.-Canada agreement. Should an agreement be reached, it will likely embolden the Trump administration to seek further use of the authority especially in instances of long-standing trade barriers to U.S. products when the importing country produces similar goods.

Several of the administration’s largest tariff actions to date have been eventually invalidated by U.S. court system and aren’t covered in this, notably those would include the signature “reciprocal tariffs” invoked under the International Emergency Economic Powers Act (IEEPA), the temporary Section 122 tariffs that were temporary in nature and various other product specific tariffs invoked under antidumping or countervailing duties.

Perhaps one of the most notable evolutions of these tariff policies over President Trump’s second term has been the slow move toward considering and allowing some exemptions to tariffs as concern about supply chains and inflation became more widely understood. What started with firm “no exceptions” messaging, is being adjusted, and both of the latest tariff actions (Section 301 investigation on forced labor and Section 338 retaliatory tariffs on Canada) have exempted much larger swaths of products, or been much more targeted in their application.

For U.S. wheat customers facing tariffs, this should be welcome news. We at U.S. Wheat encourage starting a dialogue with staff in your region about how we can support you and products made with U.S.-grown wheat if there are concerns about impacts from U.S. tariffs or country-specific retaliation.