Foreign Tariffs Are Falling on the US Farmer Not Importer
- Who pays the retaliatory tariffs on U.S. agricultural exports is shaped by a number of factors that affect bargaining power between exporters and importers, depending on the agricultural good being traded.
- Bargaining power or lack thereof determines who pays the tariff, and how much. Factors affecting bargaining power differs by product, but ranges from strength of foreign consumer demand for U.S. products to strength of the U.S. dollar.
- In our analysis of 11 U.S. agricultural commodities representing a cross section of agricultural exports in Q4 2018, U.S. producers – not the importing country or its consumers – paid most of the cost of these tariffs in all but two cases.
- With the prospect of declining bargaining power, U.S. exporters of most agricultural commodities will face still greater pressure to absorb more – if not all – of the costs of retaliatory tariffs in the future.
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