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Effects on the US due to retaliatory tariffs

The retaliatory tariffs led to a significant reduction in US agricultural exports to retaliatory partners, an analysis released by the USDA concluded.

Nationwide, direct U.S. agricultural export losses due to retaliatory tariffs totaled more than $27 billion during 2018 and through the end of 2019.

Among retaliatory partners, China accounted for about 95% of the losses ($25.7 billion), followed by the European Union ($600 million) and Mexico ($500 million), with Canada, Turkey and India having smaller shares.

The USDA estimates that annualized losses for selected commodities from retaliatory tariffs were $13.2 billion from mid-2018 through the end of 2019.

Retaliatory tariffs

In 2018, the United States imposed Section 232 tariffs on steel and aluminum imports from major trading partners and, separately, Section 301 tariffs on a wide range of imports from China.

In response to these actions, six trading partners (Canada, China, the European Union, India, Mexico, and Turkey) responded with retaliatory tariffs on a variety of US exports, including agricultural and food products.

Retaliated agricultural products were valued at $30.4 billion in 2017, with individual product lines experiencing tariff increases ranging from 2 to 140 percent.

At the commodity level, soybeans accounted for the predominant share of total trade loss, accounting for nearly 71% ($94.00 million annualized loss) of the total, followed by sorghum (over 6% or $854 million annualized loss). ) and pork (almost 5% or 646 million in annualized losses).

Statewide, again according to the USDA, losses were largely concentrated in the Midwest with Iowa ($1.46 billion in annualized losses), Illinois ($1.41 billion), and Kansas ($955 million), accounting for roughly 11, 11 and 7%, respectively, of total losses.

In the case of soybeans, most of the trade lost by the United States was gained by Brazil.

In 2020, US agricultural exports to China recovered significantly following the signing of the Phase One Economic and Trade Agreement between the United States and China (Phase One Agreement) and a separate retaliatory tariff exemption program; however, a year after the agreement, the US market share was still below pre-retaliation tariff levels.

 

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