A new study highlights the risks to American farmers if a United States-China trade war reignites, showing that tariffs would harm U.S. corn and soy producers while benefiting South American competitors.
Concerns about a renewed U.S.-China trade war have been growing as tariff increases and other economic tensions escalate. In 2024, the U.S. imposed new tariffs on Chinese imports, and depending on the outcome of the November presidential election, additional measures could follow.
Oxford Economics reported that U.S. tariffs have cut imports from China by 35 to 40 percent. They estimate a 1 percentage point rise in U.S. tariffs cuts imports from China, which they report would mean high tariffs being discussed in the U.S. would be prohibitive.
The tariffs could cause economic fallout across rural communities, and a conflict could permanently shift global market dynamics.
The study, commissioned by the American Soybean Association (ASA) and the National Corn Growers Association (NCGA) and conducted by the World Agricultural Economic and Environmental Services, states that if China reinstates tariffs on U.S. soybeans and corn, as previously outlined in the Phase I agreement from 2020, the impact would be immediate and severe.
U.S. soybean exports would decline by 14 to 16 million metric tons annually, a 51.8 percent drop from expected levels, while corn exports would plummet by 2.2 million metric tons per year, an 84.3 percent reduction.
File photo of a farmer harvesting soybeans. A new study highlights the risks to American farmers if a U.S.-China trade war reignites.
Nicholas Smith/Getty Images
“The U.S. agriculture sector is going through a significant economic downturn. This work shows that a trade war would easily compound the adverse conditions that are placing financial stress on farmers,” ASA Chief Economist Scott Gerlt said in the report.
The loss of U.S. exports would create opportunities for Brazil and Argentina to fill the gap.
With China turning to these countries for its agricultural needs, U.S. farmers would find it difficult, if not impossible, to regain lost market share once the tariffs are lifted. Brazil, in particular, would see rapid expansion in its production capacity, further solidifying its role as the world’s leading soybean supplier.
“The study highlights the dangers that come with broad tariffs on imports,” NCGA Lead Economist Krista Swanson said in the report. “While launching widespread tariffs may seem like an effective tool, they can boomerang and cause unintended consequences.”
The report emphasizes that even if U.S. farmers attempt to divert their exports to other nations, the demand from the rest of the world is insufficient to offset the massive loss of Chinese buyers. Prices for both corn and soy would likely fall dramatically, causing ripple effects in rural communities heavily reliant on agriculture.
The NCGA and ASA have urged lawmakers to consider the potential long-term damage to American agriculture.
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