A recent study underscores the risks that American farmers may face if the U.S.-China trade war reignites. The research indicates that tariffs could adversely affect U.S. corn and soybean producers while benefiting competitors in South America.

Commissioned by the American Soybean Association (ASA) and the National Corn Growers Association (NCGA), the study was conducted by the World Agricultural Economic and Environmental Services (WAEES).

As concerns grow over a potential resurgence of the trade conflict, with new tariffs on U.S. imports from China set for 2024, the outcome of the upcoming November presidential election may precipitate further actions.

According to a report from Oxford Economics, U.S. tariffs have caused Chinese imports to decrease by 35% to 40%. They estimate that for every one percentage point increase in U.S. tariffs, imports from China will drop, indicating that high tariff policies currently under discussion in the U.S. could have a dampening effect.

The economic impact of tariffs could disproportionately affect rural areas and might permanently alter global market dynamics.

The study highlights that if China reinstates tariffs on U.S. soybeans and corn, as stipulated in the first-phase trade agreement from 2020, it would lead to immediate and severe consequences. U.S. soybean exports could decrease by 14 to 16 million metric tons annually, a staggering drop of 51.8% from current expected levels. Similarly, corn exports could decline by 2.2 million metric tons, marking an extraordinary 84.3% plunge.

Scott Gerlt, ASA’s chief economist, commented on the findings, stating, “The U.S. agricultural industry is currently facing a significant economic downturn, and this research demonstrates that a trade war would easily exacerbate the financial pressures farmers are already under.”

The loss of U.S. exports would create opportunities for Brazil and Argentina to fill the gap. As China turns to these countries, even if tariffs are lifted, American farmers may struggle to regain lost market share, particularly as Brazil rapidly expands its production, solidifying its position as a leader in global soybean supply.

Krista Swanson, chief economist at NCGA, warned, “This study highlights the dangers of implementing broad tariffs on imports. While introducing such extensive tariffs may seem like an effective strategy, it often backfires, leading to unexpected consequences.”

The report emphasizes that even if American farmers attempt to shift exports to other countries, global demand elsewhere may not be sufficient to compensate for the substantial losses incurred from reduced Chinese purchases. This could lead to a significant decline in corn and soybean prices, resulting in ripple effects for rural regions heavily reliant on agriculture.

Both ASA and NCGA have urged lawmakers to consider the long-term damage that these policies might inflict on American agriculture.