Tariffs, the price of ground beef, and Donald Trump

President Trump is no economic Reaganite, the latest manifestation of which is his gambit to reduce the price of ground beef by pausing higher tariffs on 300,000 tons of imported ground beef for 90 days. As Trump put it, “This beef will be sold at 25 percent below current market prices.”

Americans consume roughly 7 million tons of ground beef in a year, or about 1.8 million tons over a given 90-day period. If we assume that none of the 300,000 tons would have been imported without the tariff relief, those additional supplies would add about 16.7 percent.

If we apply the demand elasticity estimates of consumer responses to changes in the price of ground beef as reported in the economic literature, the rough price reduction that we would expect from this temporary easing of tariffs would be no more than about 8 percent. Because some substantial portion of the 300,000 tons would have been imported in the absence of this Trump tariff reduction, the price effect will be smaller still.

So whence the Trump claim of a 25 percent price reduction? Surely he cannot believe that ground beef produced domestically will sell for so large a premium over the imported competitors. Or, as is so often the case, did Trump simply pull that number out of thin air?

Whatever the case, the temporary nature of the tariff reduction — it is no accident that the 90-day period ends not long after the midterm election — means that domestic producers will have incentives to put some of their ground beef in freezers in anticipation of........

© The Hill