A 60% tariff on Chinese goods proposed by US President-elect Donald Trump before he was elected could lead to a dramatic drop in US corn and soyabean exports to China, according to a study published by the National Corn Growers Association (NCGA) and American Soybean Association (ASA).
The associations had asked the World Agricultural Economic and Environmental Services to look at the impact a tariff would have on soyabeans and corn, the 27 November report said.
In the study, it was noted that tariffs implemented during Trump’s first tenure as president from 2016-2020 had led to retaliatory tariffs on a range of US products, including many agricultural and food products, which had significantly reduced US agricultural exports to those nations.
If China cancelled its current waiver (from the 2020 Phase I agreement), US soyabean exports to China would fall by 14-16M tonnes/year, an average decline of nearly 52% from baseline levels expected for those years, according to the study.
US corn exports to China would fall about 2.2M tonnes/year, an average decline of 84% from the baseline expectation.
“This burden of a tariff on US corn and other agriculture products is not limited to US farmers who lose market share and production value,” the NCGA said in its fourth quarter Economic Update.
“The impact ripples across the US, particularly in rural economies where farmers live, purchase inputs, utilise farm and personal services, and purchase household goods.”
China and the USA signed the Phase I Agreement in January 2020 which helped end their trade war that started in 2018. Part of the agreement stipulated China would purchase US$80bn of US agricultural goods in 2020 and 2021, resulting in dramatic increases in Chinese purchases during that time.
Corn and soyabeans account for about one-fourth of total US agricultural export value, according to the report.
“The US agriculture sector is going through a significant economic downturn,” ASA chief economist Scott Gerlt was quoted as saying.
“This work shows that a trade war would easily compound the adverse conditions that are placing financial stress on farmers. Even when a trade war officially ends, the loss of market share can be permanent.”
Following Trump’s election on 6 November, the president-elect said on 25 November that he would sign an executive order placing a 25% tariff on all imports from Canada and Mexico, along with an additional 10% tariff on imports from China, in purported retaliation for drugs and migrants crossing US borders, The Guardian wrote on 27 November. Trump will be inaugurated as president on 20 January.
