Evaluating the Impact of Retaliatory Tariffs on U.S. Soybeans in China

Andrew Muhammad and S. Aaron Smith

No 302908, Extension Reports from University of Tennessee, Department of Agricultural and Resource Economics

Abstract: On March 8, 2018, President Donald Trump signed proclamations to impose tariffs on steel and aluminum imports. The proclamations were based on a Department of Commerce report that indicated that the current level of aluminum and steel imports have the potential to threaten U.S. national security (White House, Office of the Press Secretary, 2018a; 2018b). On March 22, 2018, President Donald Trump also signed a memorandum to impose tariffs on Chinese goods of $50 billion, which was based on an investigation by the Office of the U.S. Trade Representative on China’s laws, policies and practices related to intellectual property rights, innovation and technology transfer (White House, Presidential Memorandum, 2018). The proposed steel and aluminum tariffs are based on Section 232 of the Trade Expansion Act of 1962 (White House, Office of the Press Secretary, 2018a). The proposed $50 billion in tariffs on Chinese goods are based on Section 301 of the Trade Act of 1974, which gives the U.S. broad authority to respond to unfair trade practices (Leonard, 2018). Accordingly, the proposed tariffs are often referred to as 232 and 301 tariffs (we use this terminology in the report). The Chinese government responded to the 232 and 301 tariffs by threatening its own tariffs on U.S. goods, including soybeans (Caporal, 2018). Although, as of April 16, 2018, nothing has been implemented, concerns have been raised by the U.S. soybean industry about potential negative impacts (Huffstutter, 2018). If the Chinese government retaliates by imposing tariffs on U.S. soybeans, how could this impact U.S. soybean exports? In recent years, Brazil has significantly increased soybean exports to China. Could retaliatory tariffs against the U.S. result in gains for Brazil? Based on ongoing research of China’s soybean import market, we present findings of how retaliatory tariffs could impact U.S. and Brazilian soybean exports to China. This issue is particularly important because the U.S. soybean sector is very dependent on global markets, with China being the primary destination.

Keywords: Agricultural and Food Policy; Financial Economics; International Relations/Trade (search for similar items in EconPapers)
Pages: 9
Date: 2018-04-02
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Persistent link: https://EconPapers.repec.org/RePEc:ags:utaeer:302908

DOI: 10.22004/ag.econ.302908

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