Retaliatory Tariffs Led to Billions in Ag Export Losses, USDA Says
Retaliatory tariffs against the U.S. cost exporters more than $27 billion from mid-2018 to the end of 2019, with sales to China accounting for about 95% of the losses, USDA said in a new report this month. Although the phase one U.S.-China trade deal and China’s tariff exemption programs helped to “significantly” rebound some U.S. exports to the country, the agency said U.S. market share still remained below pre-retaliatory tariffs levels one year after the deal.
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The 53-page report, commissioned by the House Committee on Appropriations, details the impacts of the 2018 Section 232 tariffs on steel and aluminum imports and the Section 301 tariffs, quantifying the ways in which they dried up certain foreign markets for a range of agricultural exporters across the country. Although U.S. exporters had opportunities to sell their products to countries that didn’t impose retaliatory tariffs, USDA said “the overall effect was a reduction in U.S. agricultural exports.”
Tariff retaliation caused U.S. exports to China to drop by more than 83% from mid-2018 to the end of 2019 for shipments of coarse grains, oilseeds, tobacco, wheat and soybean meal, USDA said. Other significant export losses during that period included a 99.6% decline in rice exports to Turkey, an 83.1% decline in corn exports to the European Union, a 63.6% drop in fresh fruit exports to India and a 20.2% decline in dairy products to Canada. The agency said soybeans accounted for nearly 71% of the total losses.
After the phase one deal was signed, Chinese imports of U.S. products increased by more than 110% from March 2020 through February 2021. But USDA said it is “difficult” to determine how much of the increase was directly caused by the trade deal and how much can be attributed to China’s tariff exemptions. USDA said exporters’ market shares in China still haven’t recovered to the pre-retaliatory tariff period despite China’s “record” imports after the phase one deal was signed.
The agency said the U.S. needs “continued research and analysis on the impacts of retaliatory tariffs,” partly because they overlapped with the COVID-19 pandemic, African swine fever and other “significant market events.” USDA also said more studies are needed because many of the tariffs remain in place and are affecting exporters. “Future research may be needed to assess not only the trade losses associated with retaliation,” USDA said, “but also the long-run effects of trade-distorting retaliation on U.S. export competitiveness and market shares.”