Chinese soybean imports from the United States could drop by as much 71 percent if China were to impose trade restrictions on U.S. soybeans in response to U.S. tariffs on Chinese products, according to a study for the U.S. Soybean Export Council conducted by Purdue University.
Using an advanced version of the Global Trade Analysis Project model developed at Purdue, agricultural economists Wally Tyner and Farzad Taheripour projected the outcome of several prospective scenarios, according to a university news release. They included the Chinese government adopting tariffs ranging from 10 to 30 percent on U.S soybeans.
China is the world’s largest soybean importer, buying 93 million metric tons of soybeans in 2016, mostly from Brazil, the United States and Argentina. Nearly two-thirds of all U.S. soybean exports – 62 percent – go to China.
Currently, the soybean trade is relatively unrestricted by tariffs or other border measures, Tyner says, but that could change if the Chinese decided to retaliate for tougher U.S. trade policies targeted at China.
The analysis by Taheripour and Tyner produced a wide range of results under different assumptions of protection rates, model parameters, and product coverage. Their best estimates of possible impacts of Chinses tariffs on soybean imports form United States show that if the Chinese were to adopt a 10 percent tariff on U.S. soybeans, U.S. exports to that country could fall by a third – 33 percent. Total U.S. soybean exports could decline by 18 percent and total U.S. soybean production could drop by 8 percent, the study showed.
In a scenario where China imposed a 30 percent tariff, Chinese imports of U.S. soybeans could drop by 71 percent, total U.S. soybean exports could fall by 40 percent and total U.S. soybean production could decrease by 17 percent.
Taheripour says Chinese tariffs could sharply decrease the producer price of U.S. soybeans in the short term. Over a few years, prices would fall by 2 and 5 percent under the respective 10 and 30 percent tariff scenarios.
Tyner says an escalating trade war could hurt both countries.
“The annual loss in U.S. economic well-being would range between $1.7 and $3.3 billion,” he says. “Chinese economic well-being also falls if they impose a tariff, in some cases as much or more than for the U.S. The reason for that is that soybean imports are very important to their domestic economy.”
Purdue University contributed this article.