A new trade war with China could result in deep cuts to U.S. corn and soybean exports, according to a study commissioned by trade groups representing the two commodities.
The study analyzed the impact on exports of the commodities if China ended existing tariff waivers now in place, and if China imposed 60% tariffs on U.S. products in retaliation for duties of that magnitude that former President Donald Trump is threatening to implement if elected.
According to the report by World Agricultural Economic and Environmental Services for the National Corn Growers Association and American Soybean Association, U.S. soybean exports to China would decline 14 million to 16 million metric tons a year, an average drop of 51.8%, if China ended the current tariff waivers.
U.S. soybean prices would be reduced by an average of 60 cents a bushel, while producers in Brazil and Argentina would earn about 75 cents a bushel more for their soybeans, the report says. U.S. corn prices would fall about 8 cents a bushel.
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China has annually renewed the waivers to tariffs that were first imposed in response to duties imposed by Trump in 2018. President Joe Biden has not reduced Trump's tariffs and has increased duties on other selected products.
A 60% retaliatory tariff would result “in a loss of over 25 million metric tons of soybean exports to China and nearly 90% of corn exports to China,” according to a summary of the report by economists for ASA and NCGA.
“A reignited trade war would reduce both U.S. soybean and corn prices and the combined production area of the two crops. If it were to occur, a trade war would not only reduce the value of production for U.S. farmers but also have a ripple effect throughout the U.S. economy,” the ASA and NCGA economists wrote.
During an interview Tuesday before the Economic Club of Chicago, Trump stressed his plans to raise tariffs broadly to increase domestic manufacturing. “To me the most beautiful word in the dictionary is tariff. … It needs a public relations firm,” he said.
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