U.S. tariff policies continue to evolve under the Trump administration, creating uncertainty for wheat customers around the world as tariffs, rates and exemptions shift.

A recent U.S. trade policy presentation at the Latin American and Caribbean Buyers Conference examined the history and current use of several U.S. tariff authorities. Many of the laws underlying current tariff policies date back decades, including some that were established in the 1930s, 1960s and 1970s.

While the overall impact of tariffs on wheat trade has been limited in some areas, several current actions could affect U.S. wheat customers and the broader wheat value chain.

Section 232

Section 232 tariffs, often referred to as national security tariffs, date to the Trade Expansion Act of 1962. The law gives the president broad authority to adjust tariffs or otherwise restrict trade when imports are determined to threaten U.S. national security.

The tariffs have most commonly been applied to steel, aluminum and copper, but also have affected semiconductors, pharmaceuticals, passenger vehicles, trucks and vehicle parts.

The overall impact on wheat trade has been limited, with relatively little retaliation by U.S. trading partners. Large exporters to the United States have generally sought to address underlying issues through negotiations involving quotas, bilateral agreements or reduced tariff rates.

Canada has been a notable exception. Frustration over Section 232 tariffs applying to some USMCA-compliant goods has contributed to retaliatory actions.

Section 301

Section 301 tariffs are authorized under the Trade Act of 1974 and provide broad authority to impose tariffs in response to challenges identified by the United States, including issues that are not explicitly trade-related.

The authority was widely used during President Donald Trump's first term in response to an investigation into China's intellectual property practices.

During Trump's second term, three areas involving Section 301 are particularly relevant to agricultural exporters.

One involves fees on vessels made, owned or operated by Chinese entities. Although implementation has largely been delayed, the proposed charges have raised concerns among agricultural exporters about their exposure and the scope of vessels that could be affected.

Two newer investigations involve excess manufacturing capacity and restrictions related to forced labor in supply chains.

Tariffs associated with the forced labor investigation took effect in late July. Many key U.S. wheat markets face tariffs in the 10% to 15% range. Tariffs related to the excess manufacturing capacity investigation could be additive or broader in scope for some countries, although the number of countries targeted is smaller.

The Section 301 actions will remain an area to watch as additional tariffs related to excess capacity are announced and as the administration considers potential action involving digital services taxes and other trade issues.

Section 338

Section 338 is among the oldest trade authorities being used by the Trump administration, dating to the 1930s. The authority applies to countries that discriminate against U.S. products and has seen relatively limited use in recent decades.

The administration has increasingly used Section 338 in its trade efforts involving Canada. Proposed tariffs of up to 50% on Canadian alcohol, dairy and automotive products were under negotiation as of Aug. 21, following a three-day delay intended to provide additional time for a broader U.S.-Canada agreement.

An agreement could encourage the administration to make greater use of the authority in response to longstanding trade barriers affecting U.S. products, particularly when the importing country produces similar goods.

Shifting Approach to Exemptions

Several major tariff actions taken by the administration have ultimately been invalidated by U.S. courts and are not included in the current tariff framework. These include the administration's reciprocal tariffs imposed under the International Emergency Economic Powers Act and the temporary Section 122 tariffs, along with various product-specific tariffs imposed under anti-dumping or countervailing duty authorities.

One notable development during Trump's second term has been a gradual shift toward tariff exemptions as concerns about supply chains and inflation have become more prominent.

The administration initially emphasized a no-exceptions approach. More recent tariff actions have included broader product exemptions or more targeted applications. The Section 301 forced labor tariffs and Section 338 actions involving Canada reflect that change.

For U.S. wheat customers facing tariffs, the increased use of exemptions and more targeted tariff policies could provide greater flexibility. Customers concerned about the effects of U.S. tariffs or country-specific retaliation are encouraged to work with U.S. Wheat Associates staff in their regions to address potential impacts on U.S.-grown wheat and products made with it.

Source: U.S. Wheat Associates, "U.S. Trade Policy Update: What Current Tariff Actions Mean for U.S. Wheat Customers"