US Farms Paying the Cost of Retaliatory Tariffs

Ag producers likely to absorb more costs of retaliatory tariffs as US bargaining power shifts in global commodity markets

DENVER (August 22, 2019) — U.S. farms are taking the brunt of retaliatory tariffs placed on their products, according to a Knowledge Exchange report released by CoBank, a cooperative bank serving agribusinesses, rural infrastructure providers and Farm Credit associations throughout the United States.

In an analysis of 11 U.S. agricultural commodities representing a cross-section of agricultural exports, U.S. producers — not the importing country or its consumers — paid much of the cost of these tariffs in all but two cases.

The impact of retaliatory tariffs placed on U.S. farm products reflects the lopsided balance of power between U.S. producers and their importing customers. The commoditized nature of agricultural products, inventories with long shelf lives, and ease of identifying and sourcing suitable substitutes are among the factors that give importing customers the upper hand. In some instances, the U.S. is able to take on less of a share in the cost of retaliatory tariffs due to geographic and supply chain advantages, and/or dominance in particular markets.

With the prospect of declining bargaining power, U.S. producers of most agricultural commodities will face pressure to absorb more of the costs of retaliatory tariffs in the future.

While the U.S. has highly efficient farms with advantages in natural resources along with other strengths that make many U.S. food and agriculture products the most competitive in the world, the more time competitors have to take U.S. market share and cement trade relationships will negatively impact U.S. producers’ ability to recover.

Watch a video synopsis and read the full report: Foreign Tariffs are Falling on U.S. Farmer, Not Importer

About CoBank

CoBank is a $139 billion cooperative bank serving vital industries across rural America. The bank provides commercial loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 70,000 farmers, ranchers and other rural borrowers in 23 states around the country.

CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.

Media Contacts

Julie Davis
Corporate Communications

Sherry Johnson
Corporate Social Responsibility

Dave Harding
Knowledge Exchange