With lawmakers increasingly voicing their concerns about Chinese trade practices, the American Soybean Association and National Corn Growers Association are warning against the use of import tariffs.

Having borne the brunt of the 2018 trade war with China, the groups commissioned the World Agricultural Economic and Environmental Services to evaluate the impact of another trade war. As the top two export agricultural commodities for the U.S., soybeans and corn are a prime target for retaliatory tariffs.

Many of the tariffs China imposed on U.S. agricultural products in 2018 remain in place but have been granted a waiver that has been renewed annually. China also has a tariff rate quota set at 7.2 million metric tons of corn that it has not been enforcing.

Those tariffs could easily be reinstated and China could enforce or change the tariff rate quota.

Falling exports

If China cancels its waiver and reverts to tariffs already on the books, U.S. soybean exports to China would fall between 14 million and 16 million metric tons annually, an average decline of 51.8% from expected baseline levels.

Under the same scenario, U.S. corn exports to China would fall about 2.2 million metric tons annually, for an average decline of 84.3% from expected baseline levels.

While it’s possible to divert exports to other nations, there isn’t enough demand from the rest of the world to offset the loss of soybean exports to China. The U.S. would lose a combined total of 2.3 million to 3.7 million metric tons of soybean and corn exports annually, while Brazil would gain an average of 4.9 million metric tons of soybean and corn exports.

Under this scenario, the U.S. soybean price would fall an average 60 cents per bushel below the baseline. The price of U.S. corn would drop an average of 8 cents per bushel below baseline.

60% tariff

A 60% retaliatory tariff would intensify the shock. The U.S. would lose a combined 2.9 million to 4.6 million metric tons of soybean and corn exports annually, while Brazil would gain an average of 8.9 million metric tons of annual soybean and corn exports.

Under this scenario, the price of U.S. soybeans would drop nearly $1 per bushel and the price of U.S. corn would drop an average 13 cents per bushel from already low baseline levels.

Economic losses

Depending on the scenario, U.S. soybean farmers would lose an average of $3.6 billion to $5.9 billion in annual production value. U.S. corn farmers would lose an average of $900 million to $1.4 billion in annual production value.

Based on the analysis, the groups’ economists estimated the economic impact from the combined soybean and corn crops would drop $4.9 billion annually in the first scenario and $7.9 billion in the second scenario.

The analysis didn’t consider the impact of increased tariffs on inputs, such as crop protection products and fertilizes, but the groups’ economists said the economic impact would be even more stark if that happened.

A trade war revival in an already challenging time for farm income would likely expedite the loss of farms and employment throughout the industry, they said.