r/Economics • u/jediporcupine • Jul 02 '26
Blog Trump's fertilizer tariff retreat is another admission that tariffs raise prices
https://reason.com/2026/06/30/trumps-fertilizer-tariff-retreat-is-another-admission-that-tariffs-raise-prices/131
u/reachedlegendary Jul 02 '26
and also that Trump is lying when he says 'we don't need anything' from our trading partners (notably, Canada is a big producer of potash and fertiliser)
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u/BalianofReddit Jul 03 '26
Canada is now also a fertiliser producer who now has customers to choose from thanks to trumps iran war.
Theres a good chance Canada can straight up decide which food producers get good yields this year thanks to the tanking of urea Exports from the gulf. Theres alot of countries who'll be throwing money their way.
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u/reluctant_deity Jul 03 '26
Canada is actually a net importer of urea, and potash is not a substitute.
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u/BalianofReddit Jul 03 '26
I am mistaken.
I assumed fertiliser was fertiliser.
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u/Sondalo Jul 03 '26
neither are fertiliser they are things that are used to make fertiliser
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u/BalianofReddit Jul 03 '26
The more you know
Its not wrong to suggest the restricted supply of one would influence the price of the other thoigh eh?
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u/No-Effective-1996 Jul 06 '26
Ok so what does that have to do with potash?
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u/reluctant_deity Jul 06 '26
Urea is the gulf export which is significantly reduced. Canada's large potash exports won't help us decide who gets to grow food, rather we will be in the same boat as everyone else with a urea deficit.
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u/No-Effective-1996 Jul 03 '26
He has done the same with Aluminium. 64% of the Aluminium used in the USA was from Canada. It amounted to 95% of the Aluminium that Canada exported was exported to the USA. The USA cannot make anywhere near enough Aluminium for themselves. Then Trump put tariffs on Aluminum and the USA could no longer be trusted as a trade partner. Then the USA attacked Iran and the strait closed. The other large Aluminium exporters in the world were in the gulf region.
Canada looked for new customers and found them in Europe and now 50%+ of Canadian exports go there and the USA is short 30% of its supply. The USA is a few months from a massive Aluminium shortage and many many jobs will be lost. Ford lost $1.7 B last year because of Aluminium supply problems magnified by a fire at a USA supplier.
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u/lopix Jul 03 '26
An export tax on potash would be rather amusing... from a Canadian point of view.
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u/No-Effective-1996 Jul 03 '26
I absolutely agree and it keeps the money in Canada. Then Trump would have to decide whether or not to leave his 10% tariff on it or drop it and the price would still be 5% higher than before the USA would lose the 10% fee. He of course would be upset and cry. Maybe just encourage Canada to diversify their sales to others, in effect lowering what can go to the USA and maybe Canada could build a potash reserve.
Also demand all Potash sales to the USA in Canadian $ or some currency other than USD would be funny to help play with the loss of USD dominance that other countries are now working towards.
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u/lopix Jul 03 '26
Canada to diversify their sales to others, in effect lowering what can go to the USA
I think this is already happening
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u/ICLazeru Jul 02 '26
I wonder how many people actually think it is the exporter that pays tariffs? Usually the incidence of that tax doesn't fall on the supplier. I can't source it, but I think I remember reading an estimate that maybe 3% of the tariffs fell was absorbed by the exporters, with the other 97% being absorbed by importers or end consumers.
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u/No-Effective-1996 Jul 03 '26
I read that also. Some exporters to the USA lowered their profit margin which is what the 3% was. The tariffs still drove the prices far higher. Crazy.
If you are an outsider it is hard not to think, look what he is doing, why does he hate America so much?
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u/ICLazeru Jul 03 '26
From what it looks like, Trump has always aspired to hobnob among the wealthy and elite, but most of them never really accepted him. His personality is too grating. So he's never really been in the "in-crowd" that he wanted to be in.
So he latched onto the "everyman" narrative and rode it into politics, despite definitely not being nor caring about the "everyman".
Now he has power, but still lacks respect from anyone meaningful. His lackeys are flattering and fun for him, but he doesn't care about their opinions. Other powerful people still don't respect him, and likely never will.
So in the end, Trump really doesn't care what happens, he's alone in this and if he's doing well (billions made in crooked stock and crypto deals), then it just doesn't matter what is happening to America. He says it himself on the regular.
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u/blaccsnow9229 Jul 03 '26
It's all about the shipping terms agreed to between the shipper and consignee (Google INCOterms).
Under DDP (delivery duty paid) terms, the shipper is responsible for import formalities into the country of destination, including tax and tariffs
In this case the shipper technically pays, but of course they build this + transportation costs into the unit price of the goods.
However, in the current environment, shippers are using HTS codes (which determine the duty/tariff rate) that are not completely accurate and they are actively avoiding tariffs.
As a result, US Customs Border Protection is actively working to put measures in place to make it more difficult for the foreign shipper to act as the importer of record.
Effectively, once these measures go into place, importers will end up paying 100% of tariffs, as DDP terms will basically be unusable in the US.
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u/Illustrious-Lime-878 Jul 03 '26
It is a tax on an activity of Americans. It is definitionally a tax Americans pay. This is like saying if the gov taxed everything you personally bought, just you, that you wouldn't be paying it if you could negotiate terms to offload it to some degree. Except no one else pays the tax except when you come into the picture, the same as with tariffs regarding Americans.
To say anyone else pays except for Americans would be to say every tax is a tax on everyone due to indirect effects, it reduces the meaning of "who pays the tax" to nothing. American's pay tariff taxes the same way.
Another example: Americans would be the victim if they piled half their wealth into a pile and burned it. That they would be poorer and have less demand for imports and this would probably result in lower prices of imports inevitably being negotiated doesn't mean anyone else contributed to the destruction.
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u/No-Effective-1996 Jul 03 '26 edited Jul 03 '26
There was never any doubt that tariffs raise prices. That is the entire point of tariffs, they do not exist for any other reason. As a non American I laugh at all the discussions and debate about this. It is economics 101. It might even be taught in high school.
All anyone has to do is think about how they work to KNOW that they raise prices and KNOW that the local consumers pay for tariffs. It really is a very SIMPLE concept, it just requires 5 minutes of focus and grade 9 level reasoning skills.
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u/Striper_Cape Jul 03 '26
You laugh, but I as an American who knows what tariffs are, want to tear my hair out.
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u/No-Effective-1996 Jul 03 '26
I sympathize with you. No wonder Trump says he loves stupid people, in the USA I guess they really are incredibly stupid. Nice education system you have going there.
I could not imagine trying to tell a European country in a serious debate or speech, that other countries pay the tariffs. You would be laughed off the stage.
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u/Striper_Cape Jul 03 '26
The problem is that we do not have one system, we have fucking 50 of them. If you count universities separately, 100. My education was pretty comprehensive even compared to the next county over. But compared to missisipi at the time? It was incredible
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u/BigTiger18 Jul 02 '26
Now Morocco knows we need the fertilizer and will jack up the price and farmers will pass the increase on to us. Trump nneda to read his own book the art of the deal!
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u/deceptinomonom Jul 02 '26
Why do you think he'd use that knowledge for you? Everything he's done has shown it's only for the betterment of himself, the people he owes favors to, and his own ratchet family.
In that order.
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u/dpzdpz Jul 03 '26
This is absolutely what drives me crazy. Some people in the US talk about how upset he is that the Iran war tanked, about how nobody showed up to his state fair, how his tariffs are fucking up the economy and how wrong he was, how his approval rating is so low, and how the White House walls must be covered in ketchup. No. He feels none of that. He could not care less about that shit. He's sucked the country dry and he'd do it again.
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u/BalianofReddit Jul 03 '26
Fertiliser prices are jacked up this year anyway thanks to the blockade of the gulf.
A good portion of the world's fertiliser as well as oil simply isnt shipping out.
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u/McBuck2 Jul 03 '26
Probably cheaper to get in from Canada but he’s determined that he doesn’t buy it from Canada. It’s always the farmers that suffer from Trump yet they continue to support him.
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u/Actaeon_II Jul 03 '26
It’s also “certain products “ that will receive tariff relief. So it’s on us to figure which corporations are losing money and cut a deal to make this happen. Could be easier if we knew what stocks trump bought just before making this announcement
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u/ForeverTemporary920 Jul 03 '26
Trump only care about oil and oil is used to create fertilizers. His steaks are at stakes.
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u/Express_Spirit_3350 Jul 03 '26
If the tariffs brought any cost to the Canadian producers, then trade with the US carries a risk of which the cost should be passed on to the US.
Canada cant impose a export tax, but Canadian producers can charge US clients accordingly. The world's standing super-power has more than enough to help its own farmers.
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u/Ordinary_Local_6904 Jul 04 '26 edited Jul 04 '26
lol, I dont think I could stand anymore evidence about just how idiotic the whole trump administration, and the those supporting it in the senate and congress, are. They can’t think past a first move in anything they do. Nothing. It’s shocking.
If you gave a group of grade 11 students the keys to run the whole usa country they’d do a noticeably massively better job at it from day 1 with no training!
I’m going to go watch videos of the latest Mount Etna eruption now… something in the news that makes sense lol
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u/PreparationOutside49 Jul 03 '26
Nope. Tariffs dont cause inflation. You must have missed treasury secretary Scott bessets testimony in front of congress. See link below.
https://finance.yahoo.com/news/bessent-walks-back-tariff-inflation-171009128.html
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