China’s Retaliatory Tariffs on U.S. Agriculture: In Brief

Summary

From 2010 through 2016, China was the top destination for U.S. agricultural exports based on value. In 2017, Canada became the top destination for U.S. agricultural products, and China and Mexico tied for second. However, starting in early 2018 the United States undertook several trade actions against China (and other countries) that precipitated retaliatory trade actions between the two countries. The result of this trade war was a decline in trade between the United States and China. In 2018, U.S. agricultural exports to China declined 53% in value to $9 billion from $19 billion in calendar year 2017. By mid-2019, China’s market had shrunk to become the fourth-largest destination for U.S. agricultural exports behind Canada, Mexico, and Japan.

The U.S.-China trade dispute started in March 2018, when President Trump announced tariffs of 25% on steel and 10% on aluminum imports (with some flexibility on the application of tariffs by country) using presidential powers granted under Section 232 of the Trade Expansion Act of 1962. In July 2018, citing concerns over China’s policies on intellectual property, technology, and innovation, the Trump Administration imposed tariffs of 25% on $34 billion of selected imports from China using authority delegated by Section 301 of the Trade Act of 1974. Since then, the United States has expanded the coverage of Section 301 tariffs to $550 billion of imports from China.