Apparently shaken by the Democratic gains in this month’s elections, Donald Trump has changed his tune on the economy. He still tries to get us to believe everything is marvelous, but at the same time he has rolled out a series of proposals designed to give the impression he is addressing the affordability crisis.
Most of these initiatives do not amount to much. The rollback of tariffs on some food products is easing an aspect of inflation Trump himself caused. The idea of getting banks to offer 50-year home mortgages would result in modest monthly savings for borrowers while causing them to pay much more in interest over the life of the loan and slow the rate at which they build equity in their homes. It is unclear whether the deals he has been making with pharmaceutical companies will result in significant cost reductions for consumers. The suggestion that Obamacare subsidies be replaced with payments to health savings accounts would result in the proliferation of junk insurance policies and financial ruin for those with serious health conditions.
What these initiatives also have in common is that they do not challenge corporate interests in any significant way. The one possible exception to this is Trump’s call for a probe of price fixing in the beef industry.
Earlier this month, Trump put out a social media post asking the Justice Department to “immediately begin an investigation of into the Meat Packing Companies who are driving up the price of Beef through illicit collusion, Price Fixing, and Price Manipulation.”
So far, so good. But Trump went on to refer to “Majority Foreign Owned Meat Packers,” suggesting that his real aim was xenophobic. A related White House press release was headlined “Trump Administration Cracks Down on Foreign-Owned Meat Packing Cartels.” The release went on to name what it called the Big Four meat packers—”JBS (Brazil), Cargill, Tyson Foods, and National Beef”—noting that two of them “are either foreign-owned or have significant foreign ownership and control.” (National Beef is controlled by Brazil’s Marfrig.)
It is not surprising that Trump is willing to criticize foreign corporate interests when the country involved has been the target of his scorn because of the supposed mistreatment of its former president Jair Bolsonaro, whose supporters mounted a January 6-style attack on the seat of government.
This is not to deny that the Brazilian beef giants have engaged in anti-competitive practices, yet there is no indication that their market behavior has been significantly worse than that of U.S.-based Cargill and Tyson Foods.
All four companies have been entangled in legal disputes over alleged collusion and price-fixing, yet those cases have involved private litigation rather than government enforcement actions. JBS has already paid out $160 million in settlements in class action suits filed in U.S. courts by different categories of beef purchasers.
Additional cases brought against JBS as well as Cargill, Tyson Foods, and National Beef have been consolidated in a multidistrict action now centered in federal court in Minnesota. The litigation alleges that from at least 2015 the four companies agreed among themselves to reduce live cattle purchasing and slaughter volumes for the purpose and effect of increasing their margins.
The plaintiffs charge that the companies accomplished and perpetuated this agreement through collusion at trade association conferences and industry events between executives and key employees, and through ensuing collusive relationships. This anti-competitive activity, the plaintiffs say, caused them to pay artificially and illegally inflated prices for boxed beef, which in turn elevated prices for consumers.
It is not at all clear that the Trump Administration will be as aggressive as the plaintiffs’ lawyers in attacking beef industry collusion. Attorney General Pam Bondi responded to Trump’s tweet by saying an investigation was already underway. Yet the DOJ’s Antitrust Division has been less than dynamic under Trump 2.0. No significant price-fixing action against a corporation has been resolved this year.
The seriousness of the Administration’s move against the big meatpackers was also put into question by the ridiculous statements of Treasury Secretary Scott Bessent suggesting that high beef prices are the result of reductions in the supply of cattle caused by diseased animals brought into the country by illegal immigrants.
In the end, the DOJ’s beef investigation may turn out to be no more effective in addressing affordability than any of the other gimmicks Trump has offered.