Retaliatory Tariffs Bite U.S. Farmers, Not the Importers
For nine of the 11 commodities examined by ag lender CoBank, “U.S. producers – not the importing country or its consumers – paid the cost” of retaliatory tariffs. “U.S. farms are taking the brunt of the retaliatory tariffs placed on their products, reflecting the lopsided balance of power between U.S. producers and their importing customers,” concluded three CoBank analysts, who said America will pay a price in the future, too.
“The more time that tariffs are in place, the more time our competitors have to take U.S. market share and cement trade relationships. With the prospect of declining bargaining power, U.S. exporters of most agricultural commodities will face still greater pressure to absorb more – if not all – of the costs of retaliatory tariffs in the future.”
In most cases, said the analysts, foreign countries can easily find alternative suppliers or scale back consumption of goods involved in a trade dispute. The strong dollar and transportation costs also are factors. In the case of soybeans and sorghum, the two U.S. commodities suffering the greatest declines in sales to China, Brazil was a ready replacement for soybeans and Australia was a nearby producer of sorghum. CoBank said the United States “is unlikely to gain back significant export sales in the coming years” in soybean trade with China.
Other U.S. products that saw smaller sales due to tariffs were cotton, pork, wine, and whey to China; ham and french fries to Mexico; and cooked beef to Canada.
Almonds and cheese were virtually unaffected by trade disputes; almond sales to China fell only 3% despite a 40% tariff and cheese exports to Mexico grew 3%, when sales in late 2018 were compared to dollar values in late 2017. The United States supplies two thirds of the world’s almonds, so there were few alternatives for China. In the case of cheese, the U.S. is a longtime and next-door supplier to Mexico, which had equally high tariffs on EU cheese.