President Donald Trump declared "Liberation Day" in April when he announced a series of new American trade policies. He said expansive tariffs would launch a new chapter in U.S. economic history.
Months later, the U.S. Supreme Court is considering the legality of the Trump tariffs. A swiftly changing policy landscape has made tariff rates difficult to detect in real time.
Evert Van der Sluis is a professor of economics at South Dakota State University. He said the uncertainty is impacting long-term planning and investments in the farm sector.
"Yes, we hear about these tariffs going up and down. We don't know the next morning when we get out of bed what really is the level of the tariff," Van der Sluis said. "But it's that very uncertainty, that up-and-down, that is creating this world that is unstable. It makes it really difficult for businesses to make any decisions."
Meanwhile, an economic crisis in Argentina has the administration authorizing billions of dollars in financial support for that struggling economy.
The flush of U.S. dollars allowed Argentina to lower its export tax on grain products. China subsequently bought more than a million tons of soybeans from Argentina, further impacting South Dakota soybean producers.
"That kind of illustrates that these temporary shocks can make big changes in the structure of these supply chains," Van der Sluis said.
Van der Sluis said China learned from the soybean price fluctuations in 2004 about the value of investing in South American infrastructure.
"Trade is inherently multilateral," he said. "We thought we could pick a fight with China. But, of course, China finds other avenues to route their products through. To some degree we have overestimated our own indispensability and underestimated the adjustment cost."
Complex supply chains can adapt, he said. But developing new relationships for trade takes time to build.
