Ag Policy Blog

Removing Tariffs from Trade

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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A USDA ERS study looked at how agricultural trade would change if all tariffs were eliminated. Overall trade would increase about 11%, but certain countries would see imports increase even more. The blue chart shows estimated changes in exports, and the green chart shows estimated changes in imports. (Chart from the USDA Economic Research Service)

Agricultural trade globally would rise by more than 11% if every country removed their tariffs on ag products, according to an analysis released by USDA's Economic Research Service.

ERS looked at a hypothetical situation where all global tariffs were removed from agricultural trade.

A few countries with high overall tariffs would see agricultural imports rise significantly more. India, for instance, would see agricultural imports increase as much as 90%. Japan and Russia also would each see imports rise 30% and 20%, respectively.

The big winners for commodities would be poultry, pork, beef and rice, which ERS forecasts would aloo see 30% to 40% increases in exports globally.

Agriculture remains a protected industry around the world with a high volume of agricultural products considered "sensitive" for national security reasons. ERS noted tariffs are higher for agricultural products than other goods in more than 90% of countries globally. In South Korea, for instance, tariffs on agricultural products average 79% compared to 4% of other imports. India also ranks high among the highest average tariff rates at nearly 40% even for the agricultural products it imports the most.

The three largest importers in the world, the European Union, China and the U.S. all have average import tariffs under 10% for agricultural products.

A particular tariff on one agricultural product in one country can send their average global tariff through the roof, as is the case with corn. South Korea imported one-third of all global corn shipped in 2014, but the country's average corn tariff is 328%. So the average global tariff for corn is above 50% even though most of the world on average has a 5% tariff or less on corn.

Generally, poultry and pork -- defined as other meats -- have the second-highest average tariff at 17%, followed by oilseeds at 16%, which is also tied to high tariffs in South Korea.

Removing tariffs would increase consumer "well being" measured in income by about $56.3 billion. Consumers in the European Union ($10.8 billion) and Brazil ($8.8 billion) would benefit the most, though consumers in the U.S. would see a benefit of about $3.5 billion. Some areas would see higher costs and "experience a loss of welfare" including China at $1.9 billion in cost, Asia ($428 million) and Africa ($150 million).

The ERS study did not delve into details about retaliatory tariffs currently on U.S. agricultural products, such as the tariffs that remain on ag products to China.

USDA's Foreign Agricultural Service released updated export numbers from January through April showing $59.2 billion in agricultural exports for the first four months of the year, up 26% from the same period in 2020.

Sales to China reached $10.7 billion, up 130% compared to $4.6 billion for the first four months of 2020. Soybeans accounted for $3.5 billion in sales, corn accounted for $1.6 billion, pork products reached $710 million and ethanol accounted for $134 million. https://apps.fas.usda.gov/…

ERS: How the Removal of Tariffs Would Impact Agricultural Trade https://www.ers.usda.gov/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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