Sabala, Ethan

By: Sabala, Ethan; Devadoss, Stephen
China targeted U.S. soybeans, among other commodities, for its recent retaliatory tariff chiefly because of the sheer volume of its imports from the United States. We develop a theoretical and empirical spatial equilibrium trade model to analyze the effects of the 25% Chinese soybean tariff on the United States, China, and nine other major soybean trading regions. Both the United States and China incur welfare losses as a result of the tariff, but Brazil experiences a large net gain. The United States mitigates some of its losses by reallocating trade to other importers, but at a cost to smaller exporters such as Canada.