The U.S. dairy industry would suffer a significant blow on a number of products resulting from a proposed 25 percent tariff imposed on dairy products by China, according to a study.
Dr. Luis Ribera, director of the Center for North American Studies at Texas A&M University and Texas A&M AgriLife Extension Service economist, found a number of issues that could hamper U.S. dairy producers.
The study initially examined the impacts on potential retaliatory tariffs on both China and Mexico export dairy markets.
Regarding China, the study examined three potential scenarios: using elasticities to measure the potential losses of the China dairy export market; a 42 percent loss of the China dairy export market as seen in exports data for July and August; or total elimination of the China export market.
“As a 25 percent tariff was imposed, there was a reduction in imports of U.S. dairy products of 42 percent in July and August compared to last year,” he said. “That’s not just economics, but also politics at play here. That makes sense in China since it’s a centralized decision. The interesting part of this is a combination of economics and politics.”
Further, Ribera said they examined the implications if the China market was eliminated for U.S. dairy exports.
“We found that more than 16,000 jobs would be eliminated, and it could cost up to $3.4 billion in annual losses,” he said. “That’s a big hit with regards to money turning over in our own national economy, so the implications of these potential scenarios could carry some big weight.”
He said the bottom line is producers will take a hit regardless of economics or politics. “We won’t be sending as much product oversees, not selling as much, (and) still losing that important market.”
With U.S. midterm elections coming up, much of this has yet to play out, but any of the study’s findings have negative implications on the U.S. dairy market, Ribera said.
The study is available at http://bit.ly/2CWUj1T