Markets are always looking for a reason to be worried. Tariffs are a reason to latch on to in the current climate. Plus, the general media doesn’t like the specter of less federal government, doesn’t like anything President Donald Trump is doing and has found a new bugaboo in Elon Musk.
Exports have become a more significant part of the equation of beef demand, yes. As for the general economy, imports are around 15% of GDP. While that’s significant, it is not a dominating portion of the economy. The beef industry has about the same percentage.
Overhauling the global trading system—which is the Trump administration’s intent—is not an overnight project. It will take some time and patience. Critics have none of that patience and no confidence that Trump knows what he’s doing. It doesn’t help that uncertainty is part of his negotiating strategy. Always keep the other side guessing is part of it. But neither the markets nor the media can handle that.
So, while the jabs and punches keep happening, the result—rebalancing the benefits other nations get from our spending on defense and infrastructure with what we pay for imported goods and services—could be worth the short-term chaos. That is the strategy, even if some refuse to believe there is one at all.
Spending cuts, tax packages, deregulation, tariffs—it’s the big picture that’s important.
As I’m writing this, a government “shutdown” of some functions is possible. For once, there are different dynamics at work. The Republicans pushed a continuing resolution through the House first and then recessed, maneuvering to put the “onus” of a government “shutdown” on the Senate Democrats. The public has become much wiser to the media misrepresenting things. So, the Democrats relying on the media to blame Republicans for stopping government functions may not work this time.
However, the Senate Democrats may try to force a short-term continuing resolution, to avoid increased defense spending and non-defense spending in the Republican bill.
The real key to the economy—and thus to keeping demand for beef so strong—is Congress passing a reconciliation bill with very important tax provisions in it. While there is lots of discussion, one fact seems undeniable. If Congress does not extend the tax structure we have been operating under for the last seven years, the economic growth we’ve had from the 2017 tax cuts will come crashing down. Business investment, the stock market—and taxpayer expectations if they are paying attention—is treading water until everyone knows what the rules will be after 2025. Economic forces respond to certainty and abhor uncertainty.
If Congress can get a good tax package by this spring using the reconciliation process, i.e. with requiring only 51 votes in the Senate instead of 60, the economy and American optimism will ignite.
What’s a good tax package? The 2017 tax cuts are a starting point: having cut the corporate tax rate from 35% to 21% (which boosted real wages for the first time in many years), increasing the standard deduction for middle class taxpayers, cutting tax rates for Subchapter S corporations and LLC pass-through small businesses from 43.4% to 15%, and expensing and accelerated depreciation for capital equipment, were key.
Discussions this time around include further reducing the corporate tax rate to 15%, making 100% immediate expensing of capital expenditures permanent rather than gradually phased out—including for new factories and not taxing tips, overtime and any Social Security, are important additions being discussed.
Making a new structure permanent rather than “for a limited time” is essential.
Hovering over everything is the status of inflation. Inflation is caused by government spending borrowed money. Government spending involves tax money taxpayers must pay. Tariffs are essentially voluntary expenditures by taxpayers. They may have some effect on prices, depending on how exporters and importers respond, but they are not inflationary like government spending.
It is critical that Congress ends the spending spree it has been on for years. The Department of Government Efficiency (DOGE) is a good start in uncovering things we can’t afford. Deregulation to unleash the power and innovation of the private sector is crucial.
The Trump administration’s breakneck early pace was great but turning around the entire economy and the global trading system will take some time. What is the time-honored military motto? The difficult we do right away; the impossible takes a little longer.
Remember the Incredible Receding Recession in 2023 and 2024? — Steve Dittmer, WLJ columnist
(Steve Dittmer is the author of the Agribusiness Freedom Foundation newsletter. Views in the column do not necessarily represent the views or opinions of WLJ or its editorial staff.)
