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Our Weekly Economic News Roundup: From Tesla to McDonald’s
January 11, 2025
How Disasters Move Money
January 13, 2025
During 2018, President Trump announced tariffs–some at 25%– on $250 billion of China’s exports to the U.S.
CNN showed us how tariffs work:
At this point, we could say that shoes and almonds are unrelated.
Not necessarily.
Almond Tariffs
Assuming the CNN tariff story was about shoes from China, a second graphic would display the response.
As the Trump tariffs kicked in, China slapped its own tariffs on billions of dollars of U.S. goods. For U.S. almonds, China’s tariffs rose from 10% to 25%. At the same time, since Australia’s almond exports to China had no tariff (because of their free trade agreement), they could charge less.
The ripple had begun.
Almond processing equipment makers like Gruber Manufacturing were hit. As the makers of almond elevators, Gruber uses parts from Europe, Asia, and Mexico to make them. With tariffs, parts became more expensive. On a motor, for example, that cost them $1,000, they had to add a $200 tariff. They told the BBC that they passed the cost to their customers.
Meanwhile, with Chinese demand plunging, California farmers redirected their almond shipments to elsewhere in the U.S. and to India. Still losing revenue, though, they then went to the U.S. government. Through the Market Facilitation Program (MFP), California’s almond farmers got checks for $8.59 billion in 2018 and $14.5 billion in 2019.
You can see MFP was a massive program:
Our Bottom Line: The Coast of Great Britain
Explaining how the length of a coastline can be infinite, a fractal mathematician said the closer you look, the more you see:
Similarly, a tariff sounds rather like a simple way to get money from another country until you look more closely at almonds.
My sources and more: The path for today’s post started with a BBC World Business Report podcast segment on almonds. It continued with CNN and the Farm Doc Daily. Then we got more detail here, here, and here. And finally, the Tax Foundation and the Congressional Research Service (CRS) are always ideal sites for facts.
From photographer Chris Boswell, our featured image shows an almond tree farm.
1 Comment
Of course tariffs impose costs on the country that imposes them; but they are an excellent way for a kleptocrat to extract bribes for himself and his cronies by using his authority to grant individual exemptions to importers and industries.