AAEA: Trade war had more impact on U.S. exports than previously reported
The trade war between the United States and China and other countries has led to bigger losses of U.S. agricultural exports than analyses have shown, five economists reported in Choices, the journal of the Agricultural and Applied Economics Association.
Year-to-year analyses showed that “U.S. soybean exports to China were $11.2 billion from July 2017 to June 2018, before falling 72%, to $3.1 billion between July 2018 to July 2019, when retaliatory tariffs were in place,” the report noted.
“Analogously, total agricultural exports from the United States to China fell by $10.7 billion, or 58% over the same period.”
“However, before and after comparisons do not account for confounding factors in addition to retaliatory tariffs. For example, in the 2018/2019 marketing year, excellent weather conditions led to a record soybean harvest in the United States — over 4.5 billion bushels.
“All else equal, a harvested supply of this magnitude would result in larger-than-expected levels of U.S. soybean exports to China. In these situations, before and after comparisons are likely to underestimate the impact of tariffs.
“Similarly, other confounding supply and demand shocks pervaded throughout the 2018/2019 trade conflict — African swine fever in China (ASF), record supplies of U.S. livestock production, and exceptionally poor U.S. planting conditions in spring 2019 — which collectively challenge identification of the causal impact of retaliatory tariffs.”
The authors also said, “Retaliatory tariffs imposed by China have resulted in the largest decline in U.S. agricultural product exports. On a monthly product-by-product basis, U.S. agricultural exports subject to China’s retaliatory tariffs were down by 71% on average, compared to the same product–month periods in the 2016/2017 benchmark.”
The report noted that changes in exports to Canada “were statistically insignificant and not distinguishable from zero,” most likely because the U.S. and Canadian economies are so closely integrated.