International Trade Policy: Insights from a General-equilibrium Approach

Edward Balistreri

Center for Agricultural and Rural Development (CARD) Publications from Center for Agricultural and Rural Development (CARD) at Iowa State University

Abstract: It is easy to convince Iowa farmers that the trade war with China has substantial costs, as current agricultural commodity prices reflect reduced export demand. Rather than bear the burden of retaliatory tariffs, China moved toward other sources and substitutes for soybeans. The adverse export-demand shock is absorbed within the US market by inventory (and eventually production) adjustments and price reductions, and farm revenues fall as a result. This narrative might well outline the primary mechanism by which many Iowa farmers feel the pain of the trade war, but it is woefully incomplete.

Date: 2019-04
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Persistent link: https://EconPapers.repec.org/RePEc:ias:cpaper:apr-winter-2019-4

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