China’s Retaliatory Tariffs on U.S. Agricultural Products
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January 29, 2019
China’s Retaliatory Tariffs on U.S. Agricultural Products
United States and Chinese officials are engaged in talks to
Figure 1. Leading Markets for U.S. Agricultural and
resolve a trade conflict that began in 2018 and resulted in
Food Exports
the imposition of tariff hikes by the two countries on each
Calendar Years 2007-2017
other’s goods. The outcome of the talks could affect U.S.
agricultural and food exports. President Trump and Chinese
President Xi Jinping agreed on December 1, 2018, to
suspend additional planned increases in punitive and
retaliatory tariffs for 90 days to allow for negotiations.
During that meeting, China agreed to make “substantial”
purchases of U.S. agricultural products, according to the
White House. Representatives from the Office of the U.S.
Trade Representative (USTR) and other U.S. trade officials,
including the U.S. Department of Agriculture’s (USDA)
Under Secretary for Trade and Foreign Affairs, held talks
with Chinese officials in Beijing on January 7-9, 2019, the
first formal meeting between the two countries since Trump
and Xi met the prior December. Purchases of U.S.
agricultural products were among the topics discussed in
Source: USDA Global Access Trading System (GATS). Accessed
Beijing.
January 28, 2019. Values are not adjusted for inflation.
China has levied retaliatory tariffs on almost all U.S.
China’s Retaliatory Tariffs
agricultural and food exports, among other products, in
China has levied retaliatory tariffs of 5%, 10%, 15%, 20%,
response to trade actions by the Trump Administration. In
and 25%—or a combination of those amounts—of the value
spring 2018, the Trump Administration applied tariffs under
of the exported product on more than 800 U.S. food and
Section 232 of the Trade Expansion Act of 1962 on all
agricultural products. The first retaliatory tariffs, which
imports of aluminum and steel products. The
were in response to the Section 232 tariffs, went into effect
Administration also applied tariffs to certain imports from
on April 2, 2018, and were applied to about 90 food and
China under Section 301 of the Trade Act of 1974 in
agricultural products. China applied tariffs to more than 500
response to China’s intellectual property rights and
additional food and agricultural products, including
technology policies. All told, about 99% of the value of
soybeans, on July 6, 2018, in response to the Section 301
U.S. food and agricultural exports are subject to China’s
tariffs. On September 24, retaliatory tariffs were levied on a
retaliatory tariffs. For more information on the retaliatory
third tranche of about 350 additional food and agricultural
tariffs imposed on U.S. food and agricultural exports by
products following an escalation in Section 301 tariffs by
China (and other retaliating countries), see CRS Report
the United States. The products subject to retaliatory tariffs
R45448, Profiles and Effects of Retaliatory Tariffs on U.S.
span all agricultural and food categories, including grains,
Agricultural Exports.
meat and animal products, fruits and vegetables, seafood,
and processed foods.
Agricultural Trade with China
Since 2010, China has competed with Canada as the leading
Effects on U.S. Soybean Exports
market for U.S. agricultural and food exports (see Figure
China has levied retaliatory tariffs of 25% on U.S.
1). However, the tariffs China imposed in 2018 caused
soybeans, raising the total tariff rate to 27% and effectively
overall U.S. agricultural and food exports to China to
restricting access to what was the largest U.S. export
decline, largely due to a drop in exports of U.S soybeans,
market for that crop in 2017. About one-half of all soybeans
according to USDA. U.S. agricultural and food exports to
produced in the United States were exported prior to the
China in FY2018, amounted to $16.3 billion (calendar year
application of the tariffs. Of those U.S. soybean exports,
2018 data are not available), a decline of about 25% from
more than one-half—about $12 billion worth—were
FY2017. In its trade forecast of November 29, 2018, USDA
shipped to China in 2017, where they were used largely for
projected that U.S. agricultural exports to China would fall
animal feed.
to about $9 billion in FY2019 due to the tariffs. It is unclear
when, or even whether, U.S. agricultural and food products
After China hiked its tariff on U.S. soybeans in early July
would regain their market share if China were to remove its
2018, U.S. exports to China essentially halted. U.S. soybean
retaliatory tariffs.
exports for January through October 2018 were 63% lower
than during that time period in 2017 (see Figure 2).
Meanwhile, China has increased its soybean purchases from
Brazil and elsewhere. U.S. soybean prices have declined by
https://crsreports.congress.gov
China’s Retaliatory Tariffs on U.S. Agricultural Products
about 20% since China’s retaliatory tariffs took effect,
agreed to immediately begin negotiations on “structural
according to the American Soybean Association (ASA),
changes” in regard to intellectual property and technology
with the reduction in U.S. exports contributing to the
issues, along with agriculture and services, with the goal of
decline. U.S. soybean exports have increased to the
achieving an agreement in 90 days. According to the White
European Union and other countries, but those sales have
House, China agreed to make “very substantial,” though
not been enough to replace the Chinese market. Thus
unspecified, purchases of U.S. agricultural products,
soybeans producers are selling their crop at lower prices or,
particularly soybeans. President Trump, in turn, agreed to
in some cases, are unable to sell their crops at all.
suspend further tariff increases, contingent on an agreement
being reached within 90 days. For more details on the
Figure 2. U.S. Soybean Export Totals for January-
summit, see CRS Report R45448, Profiles and Effects of
October 2017 and 2018
Retaliatory Tariffs on U.S. Agricultural Exports.
On December 13, 2018, USDA reported the sale of 1.1
million metric tons of U.S. soybeans to China, followed by
two more soybean sales to China later that month, marking
the first U.S. soybean sales to China since the retaliatory
tariffs went into effect in July 2018. Additional purchases
by China of U.S. agricultural goods were discussed during
the talks on January 7-9, 2019, according to USTR.
Congressional Interest
Many agricultural groups have expressed concerns about
the retaliatory tariffs. Exports account for about 20% of
U.S. farm income, according to USDA, so U.S. farmers and
ranchers have a strong interest in maintaining and
Source: USDA GATS, January 28. 2019.
expanding export markets. Because of the broad scope of
Notes: U.S. 2018 export values have been reported only through
farm products subject to the retaliatory tariffs from China
October 2018.
and other countries and the importance of some of the
markets involved, many farmers and ranchers are likely to
USDA’s Trade Aid Package
experience some negative effects, such as lost market
USDA has indicated that it will make available up to $12
opportunities and potentially lower prices for their products.
billion in financial assistance for producers of products that
it determined would be the most directly impacted by the
While the Administration has released the trade aid package
retaliatory tariffs from China and the other retaliating
to mitigate short-term losses to farmers and ranchers, it is
countries, which include Canada, Mexico, the European
not designed to address potential longer-term negative
Union, and Turkey.
consequences, such as lower commodity prices and reduced
farm income from lost export sales. Some agriculture
Most of the money from USDA’s trade aid package will go
industry stakeholders have suggested that the potential
as direct payments to U.S. producers of corn, cotton,
effects of the retaliatory tariffs could be longer lasting
soybeans, sorghum, wheat, hogs, and dairy. Some funding
because they have created uncertainty about the reliability
will also be used for the purchase, distribution, and trade
of the United States as a trading partner.
promotion of affected commodities. About $5.2 billion in
payments had been distributed as of January 9, 2019, but
As U.S. farmers and ranchers look to regain or expand
some payments have been delayed by the government
existing markets and establish new ones, Members of
shutdown that affected operations at USDA agencies tasked
Congress may consider oversight activities to identify
with implementing the program. For more discussion of the
actions that would facilitate additional sales of agricultural
trade aid package, see CRS Report R45310, Farm Policy:
products in domestic and export markets and enhance the
USDA’s Trade Aid Package.
long-term economic vitality of U.S. food and agricultural
interests. Congress may also consider legislation aimed at
USDA expects to issue about $7.3 billion in payments to
providing more assistance to U.S. farmers and ranchers.
soybean producers under the trade aid package. ASA has
Similar legislation was introduced in the 115th Congress
supported the package but has also expressed “extreme
(H.R. 6396 and S. 3258) that would have required that any
disappointment” over the escalation of tariffs on China by
duties collected as part of the Section 232 or Section 301
USTR that preceded China’s retaliatory tariffs on U.S.
tariffs on U.S. imports be provided to USDA export
soybeans. ASA has urged USDA to focus on gaining
promotion programs to help farmers and ranchers find new
additional market access in China and elsewhere for U.S.
markets.
soybean exports.
Trump-Xi Agreement
Jenny Hopkinson, Analyst in Agricultural Policy
On December 1, 2018, at the end of the G-20 summit in
IF11085
Buenos Aires, Argentina, Presidents Trump and Xi held a
working dinner at which the Section 301 tariffs were a
major topic of discussion. According to a White House
statement following the Trump-Xi dinner, the two sides
https://crsreports.congress.gov
China’s Retaliatory Tariffs on U.S. Agricultural Products
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF11085 · VERSION 2 · NEW
January 29, 2019
China’s Retaliatory Tariffs on U.S. Agricultural Products
United States and Chinese officials are engaged in talks to
Figure 1. Leading Markets for U.S. Agricultural and
resolve a trade conflict that began in 2018 and resulted in
Food Exports
the imposition of tariff hikes by the two countries on each
Calendar Years 2007-2017
other’s goods. The outcome of the talks could affect U.S.
agricultural and food exports. President Trump and Chinese
President Xi Jinping agreed on December 1, 2018, to
suspend additional planned increases in punitive and
retaliatory tariffs for 90 days to allow for negotiations.
During that meeting, China agreed to make “substantial”
purchases of U.S. agricultural products, according to the
White House. Representatives from the Office of the U.S.
Trade Representative (USTR) and other U.S. trade officials,
including the U.S. Department of Agriculture’s (USDA)
Under Secretary for Trade and Foreign Affairs, held talks
with Chinese officials in Beijing on January 7-9, 2019, the
first formal meeting between the two countries since Trump
and Xi met the prior December. Purchases of U.S.
agricultural products were among the topics discussed in
Source: USDA Global Access Trading System (GATS). Accessed
Beijing.
January 28, 2019. Values are not adjusted for inflation.
China has levied retaliatory tariffs on almost all U.S.
China’s Retaliatory Tariffs
agricultural and food exports, among other products, in
China has levied retaliatory tariffs of 5%, 10%, 15%, 20%,
response to trade actions by the Trump Administration. In
and 25%—or a combination of those amounts—of the value
spring 2018, the Trump Administration applied tariffs under
of the exported product on more than 800 U.S. food and
Section 232 of the Trade Expansion Act of 1962 on all
agricultural products. The first retaliatory tariffs, which
imports of aluminum and steel products. The
were in response to the Section 232 tariffs, went into effect
Administration also applied tariffs to certain imports from
on April 2, 2018, and were applied to about 90 food and
China under Section 301 of the Trade Act of 1974 in
agricultural products. China applied tariffs to more than 500
response to China’s intellectual property rights and
additional food and agricultural products, including
technology policies. All told, about 99% of the value of
soybeans, on July 6, 2018, in response to the Section 301
U.S. food and agricultural exports are subject to China’s
tariffs. On September 24, retaliatory tariffs were levied on a
retaliatory tariffs. For more information on the retaliatory
third tranche of about 350 additional food and agricultural
tariffs imposed on U.S. food and agricultural exports by
products following an escalation in Section 301 tariffs by
China (and other retaliating countries), see CRS Report
the United States. The products subject to retaliatory tariffs
R45448, Profiles and Effects of Retaliatory Tariffs on U.S.
span all agricultural and food categories, including grains,
Agricultural Exports.
meat and animal products, fruits and vegetables, seafood,
and processed foods.
Agricultural Trade with China
Since 2010, China has competed with Canada as the leading
Effects on U.S. Soybean Exports
market for U.S. agricultural and food exports (see Figure
China has levied retaliatory tariffs of 25% on U.S.
1). However, the tariffs China imposed in 2018 caused
soybeans, raising the total tariff rate to 27% and effectively
overall U.S. agricultural and food exports to China to
restricting access to what was the largest U.S. export
decline, largely due to a drop in exports of U.S soybeans,
market for that crop in 2017. About one-half of all soybeans
according to USDA. U.S. agricultural and food exports to
produced in the United States were exported prior to the
China in FY2018, amounted to $16.3 billion (calendar year
application of the tariffs. Of those U.S. soybean exports,
2018 data are not available), a decline of about 25% from
more than one-half—about $12 billion worth—were
FY2017. In its trade forecast of November 29, 2018, USDA
shipped to China in 2017, where they were used largely for
projected that U.S. agricultural exports to China would fall
animal feed.
to about $9 billion in FY2019 due to the tariffs. It is unclear
when, or even whether, U.S. agricultural and food products
After China hiked its tariff on U.S. soybeans in early July
would regain their market share if China were to remove its
2018, U.S. exports to China essentially halted. U.S. soybean
retaliatory tariffs.
exports for January through October 2018 were 63% lower
than during that time period in 2017 (see Figure 2).
Meanwhile, China has increased its soybean purchases from
Brazil and elsewhere. U.S. soybean prices have declined by
https://crsreports.congress.gov
China’s Retaliatory Tariffs on U.S. Agricultural Products
about 20% since China’s retaliatory tariffs took effect,
agreed to immediately begin negotiations on “structural
according to the American Soybean Association (ASA),
changes” in regard to intellectual property and technology
with the reduction in U.S. exports contributing to the
issues, along with agriculture and services, with the goal of
decline. U.S. soybean exports have increased to the
achieving an agreement in 90 days. According to the White
European Union and other countries, but those sales have
House, China agreed to make “very substantial,” though
not been enough to replace the Chinese market. Thus
unspecified, purchases of U.S. agricultural products,
soybeans producers are selling their crop at lower prices or,
particularly soybeans. President Trump, in turn, agreed to
in some cases, are unable to sell their crops at all.
suspend further tariff increases, contingent on an agreement
being reached within 90 days. For more details on the
Figure 2. U.S. Soybean Export Totals for January-
summit, see CRS Report R45448, Profiles and Effects of
October 2017 and 2018
Retaliatory Tariffs on U.S. Agricultural Exports.
On December 13, 2018, USDA reported the sale of 1.1
million metric tons of U.S. soybeans to China, followed by
two more soybean sales to China later that month, marking
the first U.S. soybean sales to China since the retaliatory
tariffs went into effect in July 2018. Additional purchases
by China of U.S. agricultural goods were discussed during
the talks on January 7-9, 2019, according to USTR.
Congressional Interest
Many agricultural groups have expressed concerns about
the retaliatory tariffs. Exports account for about 20% of
U.S. farm income, according to USDA, so U.S. farmers and
ranchers have a strong interest in maintaining and
Source: USDA GATS, January 28. 2019.
expanding export markets. Because of the broad scope of
Notes: U.S. 2018 export values have been reported only through
farm products subject to the retaliatory tariffs from China
October 2018.
and other countries and the importance of some of the
markets involved, many farmers and ranchers are likely to
USDA’s Trade Aid Package
experience some negative effects, such as lost market
USDA has indicated that it will make available up to $12
opportunities and potentially lower prices for their products.
billion in financial assistance for producers of products that
it determined would be the most directly impacted by the
While the Administration has released the trade aid package
retaliatory tariffs from China and the other retaliating
to mitigate short-term losses to farmers and ranchers, it is
countries, which include Canada, Mexico, the European
not designed to address potential longer-term negative
Union, and Turkey.
consequences, such as lower commodity prices and reduced
farm income from lost export sales. Some agriculture
Most of the money from USDA’s trade aid package will go
industry stakeholders have suggested that the potential
as direct payments to U.S. producers of corn, cotton,
effects of the retaliatory tariffs could be longer lasting
soybeans, sorghum, wheat, hogs, and dairy. Some funding
because they have created uncertainty about the reliability
will also be used for the purchase, distribution, and trade
of the United States as a trading partner.
promotion of affected commodities. About $5.2 billion in
payments had been distributed as of January 9, 2019, but
As U.S. farmers and ranchers look to regain or expand
some payments have been delayed by the government
existing markets and establish new ones, Members of
shutdown that affected operations at USDA agencies tasked
Congress may consider oversight activities to identify
with implementing the program. For more discussion of the
actions that would facilitate additional sales of agricultural
trade aid package, see CRS Report R45310, Farm Policy:
products in domestic and export markets and enhance the
USDA’s Trade Aid Package.
long-term economic vitality of U.S. food and agricultural
interests. Congress may also consider legislation aimed at
USDA expects to issue about $7.3 billion in payments to
providing more assistance to U.S. farmers and ranchers.
soybean producers under the trade aid package. ASA has
Similar legislation was introduced in the 115th Congress
supported the package but has also expressed “extreme
(H.R. 6396 and S. 3258) that would have required that any
disappointment” over the escalation of tariffs on China by
duties collected as part of the Section 232 or Section 301
USTR that preceded China’s retaliatory tariffs on U.S.
tariffs on U.S. imports be provided to USDA export
soybeans. ASA has urged USDA to focus on gaining
promotion programs to help farmers and ranchers find new
additional market access in China and elsewhere for U.S.
markets.
soybean exports.
Trump-Xi Agreement
Jenny Hopkinson, Analyst in Agricultural Policy
On December 1, 2018, at the end of the G-20 summit in
IF11085
Buenos Aires, Argentina, Presidents Trump and Xi held a
working dinner at which the Section 301 tariffs were a
major topic of discussion. According to a White House
statement following the Trump-Xi dinner, the two sides
https://crsreports.congress.gov
China’s Retaliatory Tariffs on U.S. Agricultural Products
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF11085 · VERSION 2 · NEW