The Impact of China’s Retaliatory Tariffs on U.S. Agricultural Exports

Undergraduate Honors Thesis

Citations

Citeable URL: https://scholar.colorado.edu/concern/undergraduate_honors_theses/8623hz736

Abstract

This paper examines the impact of China’s retaliatory tariffs on U.S. agricultural exports during the 2018 trade war. I first quantify the impact of China’s retaliatory tariffs on U.S. agricultural exports to China. Then I select four major agricultural destinations besides China as case studies to analyze the trade diversion effects. I merge the U.S. monthly agricultural export data with China’s retaliatory tariff data and then build a two-way fixed effects regression model. The results suggest a significant reduction in U.S. monthly agricultural exports to China as well as pronounced trade diversions to Canada and Mexico. For a 10% increase in China’s retaliatory tariffs, the average monthly agricultural exports to China decreased by 3.23%, and the exports to Canada and Mexico increased by 2% and 4.15%, respectively. Besides, I also find that the U.S. expanded both volumes and numbers of agricultural products exporting to Canada and Mexico as China increased retaliatory tariffs.

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