Governor Spanberger Believes Tariffs Are Taxes, Until Virginia Cattlemen Want Tariff Protection

There are very few issues on which the Jefferson Forum has been in full agreement with Governor Abigail Spanberger. However, her straightforward argument that tariffs raise prices is one!

Governor Spanberger made that case against President Trump’s tariffs during his first administration. She made it again while serving in Congress during the Biden administration. She returned to it repeatedly during her campaign for governor and has continued making it from the Governor’s Mansion. Bravo!

Her central point has been simple enough: tariffs are taxes on imported goods, and those costs are ultimately borne by American consumers and businesses. This is the same point the Jefferson Forum has repeatedly made.

On this basic economic principle, Gov. Spanberger has been both consistent and correct. Sadly, this makes the Governor’s recent criticism of the Trump administration’s decision to reduce tariff barriers on imported beef particularly curious.

Faced with historically high beef prices and a domestic cattle herd near a 75-year low, the Trump administration moved in August to allow an additional 300,000 metric tons of imported lean beef to enter the United States at a reduced tariff rate. The goal was obvious: increase supply and put downward pressure on prices for American consumers.

Gov. Spanberger has objected to the lower tariffs — warning that increased imports would “directly harm Virginia’s cattle producers” by subjecting them to additional foreign competition. Cattle are one of Virginia’s most important agricultural commodities. Thousands of Virginia farmers depend on healthy cattle prices, and dramatically increasing imports will reduce the prices Virginia (and other domestic) cattlemen receive. As someone with a son in the cattle business, I get it.

Tariffs involve economic tradeoffs – tradeoffs made as the Government decides who will benefit and who will pay. Tariffs do not simply make goods more expensive for no purpose; they make foreign goods more expensive relative to domestically produced goods, thereby shielding American producers from foreign competition. But that protection will also result in higher prices for the consumers of those same protected products.

That is precisely what Spanberger has now acknowledged in the beef debate. For years, she has emphasized one side of the tariff equation. When President Trump imposed tariffs on goods from China, Canada and Mexico, Spanberger described them as taxes on Virginians. She warned that they would increase costs for families, businesses and farmers. In 2022, with inflation squeezing American households, she urged President Biden to ease certain tariffs because doing so would lower prices. Maybe this was the beginning of her “affordability” agenda?

That is essentially what the Trump administration is now attempting to do with beef. And suddenly Spanberger is emphasizing the other side of the equation because the ox (or cow) being gored is in Virginia. More imported beef will mean lower prices for consumers, but it will also mean lower income for cattle producers. So much for affordability.

The free-market presumption should be strongly in favor of free trade.

Nobel Laureate Milton Friedman’s defense of free trade rests on a simple truth: voluntary exchange benefits both sides. Nations prosper when people are free to buy goods from countries that can produce them more efficiently and sell goods and services in areas where they possess a comparative advantage.

Americans do not lose when another country can produce a particular product at a lower cost. We gain access to less expensive goods, while our labor, capital, and ingenuity can be directed toward the things Americans produce especially well.

Virginia farmers should be free to sell agricultural products around the world. Virginia manufacturers, technology companies and service providers should have access to foreign customers. Virginia families and businesses should likewise be free to purchase products from abroad when those products offer better value.

Tariffs interfere with that exchange. They force consumers and businesses to pay more, protect less-efficient domestic production, and encourage capital to flow toward industries favored by government rather than those favored by customers. They also invite retaliation against American exporters, as we are now seeing in our trade war with Canada.

The benefits of a tariff are usually concentrated and highly visible. The protected industry knows exactly what it stands to gain and has every incentive to lobby for continued protection. The costs are dispersed among millions of consumers and businesses. Each may pay only a little more for beef, steel, machinery, or household goods, but combined, those costs can be enormous and can even exceed the benefits to the protected industries.

That is why “protecting an important industry” cannot become the general standard for trade policy. Nearly every industry is important to the people who work in it, and nearly every domestic producer would prefer less foreign competition. If that alone justifies a tariff, there is no principled limit to protectionism.

There are narrow circumstances in which tariffs may be justified – national security, illegal subsidies or “dumping” to harm U.S. industries. Those should be carefully demonstrated exceptions, not a license for Washington to select favored industries for protection.

That brings us back to beef.

Governor Spanberger has dropped her once-principled free- trade position and violated her strong “affordability” agenda to protect an organized and politically active constituency at the expense of everyday Virginians, especially working families, for whom lower prices would be particularly meaningful.

Governor Spanberger cannot persuasively condemn tariffs as taxes when they protect industries elsewhere but harm Virginia consumers, yet defend their protective effect when Virginia producers benefit, despite the harm to consumers in the Commonwealth.

Government should not choose which industries to protect. It should let free people choose from whom they will buy and to whom they will sell. In the end, we all benefit from this free exchange.

Key Takeaways:

• Governor Spanberger’s beef position conflicts with her affordability message. After years of correctly arguing that tariffs raise prices for Virginia families and businesses, she now opposes lower tariffs on imported beef because they would expose Virginia cattle producers to greater competition.
• Tariffs protect politically favored producers at consumers’ expense. Beef tariffs may support domestic cattle prices, but they do so by restricting supply and keeping grocery prices higher—illustrating how the concentrated benefits of protectionism can obscure its broader costs.
• Free trade should remain the rule, with only narrow exceptions. Americans benefit when they can buy from countries with comparative advantages and sell what America produces best. Tariffs should be reserved for demonstrated national-security threats, illegal subsidies or dumping—not merely to protect an influential domestic industry.

Key Quote:

“Government should not choose which industries to protect. It should let free people choose from whom they will buy and to whom they will sell.”

Derrick Max
Jefferson Forum

Derrick Max is Vice President of Policy at the Jefferson Forum and may be reached at dmax@jeffersonforum.org