U.S. Farms Paying Cost of Retaliatory Tariffs, Says CoBank

According to a recent report by CoBank, American farmers are taking the brunt of retaliatory tariffs.  The report confirms what the industry has pointed out over the course of the trade war, that China is targeting U.S. farm products in retaliation.

In an analysis of 11 U.S. agricultural commodities representing a cross-section of agricultural exports, U.S. producers, not the importing country or its consumers, paid much of the cost of these tariffs in all but two cases.  CoBank said the impact of retaliatory tariffs placed on U.S. farm products reflects the lopsided balance of power between U.S. producers and their importing customers.

Two northwest commodities looked at in the study include cheese exported to Mexico which saw a 3% decrease from 2017 to 2018, and wine to China, where sales fell 57% year over year.

The nature of agricultural products, inventories with long shelf lives, and ease of identifying and sourcing suitable substitutes are among the factors that give importing customers the upper hand. The report says that with the prospect of declining bargaining power, U.S. producers of most agricultural commodities will face pressure to absorb more of the costs of retaliatory tariffs in the future.

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