Trying to Make Sense of Changing Tariff Policies

You may think better trade deals are the answer, or you may believe that American presidents abandoned the concept of much higher tariffs decades ago because of the harm they can cause our country’s families. Either way, you know that the past year has been volatile and unpredictable.

American agricultural producers now wait, most likely with little optimism, that the court system could deliver them refunds on the higher prices they paid because of President Donald Trump’s higher tariffs on imports that the U.S. Supreme Court ruled last month were illegal. 

Those higher tariffs raised prices on steel and aluminum, which made some grain and storage bins more expensive, along with replacement parts. Some fertilizers also cost more, which further raised price pressure on overall input costs at a time when markets struggled to pay farmers enough to cover their cost of production.

RELATED: AgAmerica looked at how much higher tariffs could expect to cost Americans when it analyzed the landscape last fall.

Marko Papic on Trump Tariffs

Geopolitical expert Marko Papic told American Farmland Owner that President Trump’s tariff policies played out like a battle between two internal White House strategies.

American Farmland Owner asked Papic how he describes President Trump’s views on foreign policy when he talks to international groups.

Papic didn’t hesitate.

“I don't think it's that hard. I don't think it's that difficult,” he said. “I believe that the world is multipolar.”

That framing, he argued, is widely accepted outside the United States, even if it makes Americans uncomfortable.

“My controversial view, at least for Americans, is, like, it's a… 12 horse race. And yes, the U.S. is the number one horse but may or may not win. It's more in doubt than it was in the 90s,” Papic said. “And so, they're acceptable to it. And then my answer is, well, Donald Trump is a reaction to that.”

In Papic’s view, Trump’s tariff policy is less about chest-thumping nationalism and more about recalibrating to a new geopolitical reality.

“He's adjusting American foreign policy to the reality that the U.S. is no longer maintaining an empire…nor is it trying to impose one,” Papic said. “He's now one of many (top foreign leaders). And when you are just one of many, the foreign policy gets a lot more Machiavellian, a lot more realist and pragmatist, less normative.”

That explanation, he said, resonates overseas.

For many in agriculture, however, tariffs can look like an attempt to reassert dominance. Are Trump’s moves a way to establish himself “as that top horse,” in Papic’s scenario?

“No, I actually don't,” he replied. “Many countries have tariffs higher than the U.S.”

Instead, Papic argued the tariffs represent the unwinding of what he calls the “carrot” of the American empire.

“Every empire is built on sticks and carrots. Every empire,” he said. “So, what was the carrot of American empire? How did America give something to the rest of the world? It was access to the American market. Unfettered access to the American market. That was the carrot.”

In other words, countries that aligned with U.S. rules and norms were rewarded with relatively open access to American consumers. But if the U.S. is no longer acting as a global empire, Papic argues, policymakers begin asking a different question.

“At that point, it's at that point that you say to yourself, well, why am I giving unfettered access, unregulated access, untaxed access, to my market, to everybody else in the world? And I think that's where the tariffs come in,” he said.

That doesn’t mean all tariffs are created equal.

“There are ways to have tariffs be… you know, onerous, and there's a way to make tariffs relatively sane,” Papic said.

He described an internal debate within the White House last spring between two competing philosophies. On one side: a more isolationist camp focused on reshoring manufacturing at almost any cost.

“That's that 35 to 40 percent tariff rate that they did set on April 2nd, by the way…that's the (U.S. Secretary of Commerce) Howard Lutnick approach,” Papic said, whom he characterized as embracing what Papic called a “Neo-McKinleyist” mindset — a nod to William McKinley, the late-19th-century president known for his enthusiasm for tariffs.

Then there is the more fiscally focused approach, which Papic associates with U.S. Secretary of Treasury Scott Bessent.

Papic explained how he sees Bessent’s view. “’Look, we do have some deficit problems, we have some debt problems. And yes, we're not an empire anymore, so let's start taxing some of these imports, not at onerous levels,’” Papic said. “’Not at levels where other countries are just gonna stop dealing with us, but at a level that's, you know, to an extent, helps with deficits, helps with debt, and maybe helps create better trade deals.’”

For agriculture, the nuance matters. Early tariff proposals swept broadly — even hitting products the U.S. cannot realistically produce at scale, like bananas and coffee.

Papic pointed to Trump’s negotiating style.

“I've always had a view that President Trump has a certain negotiating style,” he said. “Generally speaking, I tell my clients to cool it. Anytime he says something… he usually means, like, ‘bring a ladder, we'll go to the roof of the house, we'll have a beer up there.’”

In other words, the opening demand may be extreme, but the end result is often more moderate.

Although, how people view “moderate” may depend on whether you believe that this global trade war was one worth fighting.

RELATED: Marco Papic explained to American Farmand Owner last December about why he had concerns with dramatic changes in the U.S. immigration system.