Retaliatory tariffs to inflict heavy losses on US agricultural exports: study
US agricultural exports are expected to decline by 1.8 billion US dollars due to retaliatory tariffs from Canada and Mexico in response to the US decision to impose tariffs on steel and aluminum imports and could suffer greater losses with broader retaliation from other trading partners, a new study has found.
The study, conducted by three Purdue University agricultural economists, was presented on October 31 at a Farm Foundation forum at the National Press Club in Washington. Farm Foundation is an agricultural policy institute based in Illinois.
The study concluded that the United States-Mexico-Canada Agreement (USMCA) will modestly improve market access and lead to a US agricultural export bump of 450 million US dollars, mostly in the dairy and poultry sectors. However, those gains will be "more than negated" by retaliatory measures from Canada and Mexico.
With continued retaliatory tariffs from US trading partners, the decline in US agricultural exports could reach 7.9 billion US dollars, "thus overwhelming the small positive gains from the USMCA," the study said.
"We looked at all the retaliatory measures in the next situation, not just the ones that focused on Canadian and Mexican agriculture, but all of them around the world, for all products," said Dominique van der Mensbrugghe, one of the authors, while presenting the study. He pointed out that the US soybean market will be severely impacted.
The USMCA, reached a month ago, is scheduled to be signed by the three countries before the end of November to replace the North American Free Trade Agreement (NAFTA) signed in 1994.
The study also considered the possibility that the USMCA is not ratified and the US were to withdraw from NAFTA. In that case, the exports decline could be more than nine billion US dollars.