Subsidizing American farmers hurting from retaliatory tariffs is a poor long-term substitute for free and fair international trade deals, Professor Tomas Hult of the Eli Broad College of Business wrote in his third recent analysis article for one of America’s leading political publications.

Tomas Hult

Tomas Hult

“Ultimately, the answer to trade conflict losses is not more subsidies or reallocation of existing subsidies to preferred areas by this White House. The focus needs to be on fair regional and bilateral trade agreements that facilitate the opening of global markets,” Hult wrote Aug. 30 as an opinion contributor for the Hill, a Washington, D.C.-based political newspaper and Web site.

“Making farmers whole by direct payment subsidies or buying up excess produce is not a viable long-term solution that tax-paying Americans or politicians are likely to stand,” Hult wrote.

Hult publicly shared his views just after the federal government said it will offer domestic farmers billions of dollars in subsidies to help offset sales losses created by Chinese tariffs against American agriculture. Those tariffs are in retaliation for American tariffs against unrelated Chinese industries.

farmIn his latest piece for the Hill, Hult referenced the “bullwhip effect” of tariffs – where the targeting of one industry for tariffs can lead to retaliatory tariffs against entirely unrelated industries – which was also the main focus of an opinion article Hult wrote for the Hill in July.

“At minimum, we really don’t know the potential bullwhip effects that may be the result of trade wars that involve such large subsidies and selective tariffs,” Hult wrote in his latest piece. “There are tremendous ‘global efficiencies’ and U.S. production potential to be realized by engaging in more free and fair trade agreements – with a focus on opening up markets – instead of elevating tariffs and subsidies.”

Hult is the Byington Endowed Chair of the Department of Marketing, a professor of marketing and international business, director of the International Business Center at the Broad College, and executive director of the Academy of International Business.

He is a frequently-cited scholar of international business, and opinion pieces he has authored have previously been published and shared by Time magazine, Fortune magazine, and the World Economic Forum, among others. You can read Hult’s most recent Hill contribution in its entirety on the Hill’s Web site.