U.S. Farms Paying Cost of Retaliatory Tariffs

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U.S. farmers are taking the brunt of retaliatory tariffs, according to a recent CoBank report. The report confirms what the industry has pointed out over the course of the trade war, that China is targeting U.S. farm products in retaliation.

In an analysis of 11 U.S. agricultural commodities representing a cross-section of agricultural exports, U.S. producers – not the importing country or its consumers – paid much of the cost of these tariffs in all but two cases.

CoBank says the impact of retaliatory tariffs placed on U.S. farm products reflects the lopsided balance of power between U.S. producers and their importing customers. The nature of agricultural products, inventories with long shelf lives, and ease of identifying and sourcing suitable substitutes are among the factors that give importing customers the upper hand.

The more time that tariffs are in place, the more time competitors have to take U.S. market share and cement trade relationships. The report says that with the prospect of declining bargaining power, U.S. producers of most agricultural commodities will face pressure to absorb more of the costs of retaliatory tariffs in the future.

 

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CoBank


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