Estimating the Market Effect of a Trade War: The Case of Soybean Tariffs

Michael Adjemian, Aaron Smith and Wendi He

No 292089, 2019 Annual Meeting, July 21-23, Atlanta, Georgia from Agricultural and Applied Economics Association

Abstract: In 2018, China retaliated to U.S. trade action by levying a 25% retaliatory tariff on U.S. soybean exports. That tariff shifted market preferences so that Chinese buyers favored Brazilian soybeans. We use the relative price of a substitute (RPS) method to estimate that the resulting trade disruption effectively drove a wedge into the world soybean market, lowering U.S. prices at Gulf export locations by $0.65/bu on average for about five months, and increasing Brazilian prices by about $0.95/bu, compared to what would have been observed without the tariff in place. It is likely that the impact of China’s tariff on producers and purchasers of soybeans across the United States was heterogeneous and affected by local factors like transportation infrastructure, storage capacity, and crush facility proximity.

Keywords: Agricultural and Food Policy; Demand and Price Analysis; International Relations/Trade (search for similar items in EconPapers)
Pages: 20
Date: 2019-07
New Economics Papers: this item is included in nep-cna and nep-int
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Citations: View citations in EconPapers (5)

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Journal Article: Estimating the market effect of a trade war: The case of soybean tariffs (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea19:292089

DOI: 10.22004/ag.econ.292089

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