Protectionist policies are again influencing U.S. agricultural trade as the U.S. escalated tariffs on Chinese electric vehicles (EVs) in May 2024, with potential further increases on Chinese and other imports being discussed by presidential hopefuls. Additionally, lawmakers are considering revoking China’s Permanent Normal Trade Relations (PNTR) status, which could lead to even higher tariffs and escalating tensions. Historically, such measures have led to significant retaliatory actions, particularly against U.S. agricultural exports like soybeans, corn, beef, and wheat, causing financial losses for American farmers.
Three trade policy scenarios are examined:
1. A 17.5% to 75% tariff increase on Chinese goods, with China imposing a 20% retaliatory tariff on U.S. agricultural products.
2. Broader tariffs on imports from all countries, leading to global retaliation.
3. The revocation of China’s PNTR status, triggering mutual tariff increases of 9.5%.
Under these scenarios, U.S. agricultural exports, particularly soybeans and corn, could experience significant losses, with soybeans being the most vulnerable due to China’s role as the largest buyer. Potential losses range from $3.6 billion to $15.8 billion for soybeans and up to $4.4 billion for corn. Beef and wheat exports could also face declines, impacting key agricultural states like Illinois, Iowa, Nebraska, and Kansas. These export losses threaten to destabilize U.S. agriculture, especially in the Midwest, where farmers heavily rely on global markets, leading to lower prices, increased financial strain, and potential farm closures. Government intervention may be required to mitigate the impact of such losses.
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