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Predicting potential impacts of China’s retaliatory tariffs on the U.S. farm sector
Zheng, Y., Wood, D. W., Wang, H., & Jones, J. P. H. (2018). Predicting potential impacts of China’s retaliatory tariffs on the U.S. farm sector. Choices: The Magazine of Food, Farm, and Resource Issues, 33(2), 1-6. http://ageconsearch.umn.edu/record/273329/files/cmsarticle_640.pdf
We used GSIM to predict the impact of China’s retaliatory tariffs on four major agricultural commodities—soybeans, cotton, sorghum, and pork. Based on our analysis, we predict that 1) prices of these commodities will fall by 0.6% (pork) to 10.6% (sorghum), 2) exports of these commodities to China will fall significantly (up to 83% in the case of pork), while exports to other countries will increase, and 3) U.S. producers will suffer significant losses due to the decline in exports and prices (soybean producers will lose $1.8 billion). However, other factors may attenuate or strengthen our predictions. For example, the Chinese government has implemented policies to increase soybean planting acreage at the cost of corn acreage, a commodity for which China has accumulated a high inventory. Such policy changes may result in exports of this commodity to fall even further, which would make our predictions a conservative estimate.
