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GTAP Resource #5718

"The United States Trade Policies in the Twenty First Century and Impacts for Domestic Agriculture "
by Chepeliev, Maksym, Wally Tyner and Dominique van der Mensbrugghe

U.S. trade actions are likely to have significant implications for U.S. farmers as these actions target three of the largest markets for U.S. agricultural exports - Canada, China and Mexico, accounting for some 44%, and representing an average of $63 billion, of U.S. agricultural exports 2013-2015.

USMCA (or NAFTA 2.0) consolidates the gains from the original agreement and provides some additional modest market access for U.S. agricultural exports (an estimated $440 million). American farmers still face the possibility of a significant loss of export revenues. U.S. withdrawal from the TPP reduces agricultural and food exports by $1.8 billion a year ($1.4 billion, with the offsetting $440 million of USMCA export gains). Following TPP trade liberalization, there is an increase in trade within those countries, which substitutes for US agricultural exports. However, if the United States were to rejoin the TPP, the agreement would significantly benefit American farmers – a gain of $2.9 billion in additional agricultural exports.

If the current U.S. trade policy were to continue towards protectionism (i.e., with the U.S. withdrawal from TPP, with the global retaliatory tariffs and if the United States were to entirely withdraw from NAFTA), U.S. agricultural exports would drop by $21.8 billion.This scenario would also result in an aggregate welfare loss of $42.5 billion to the U.S. economy, or over $340 per U.S. household.

What does all this mean? It suggests that U.S. agriculture is entering a very risky environment with respect to international trade. On the down side, the sector risks losing much of the trade gains achieved over the past three decades. That would result in significant economic damage to American agriculture. On the up-side, if the USMCA is approved, if the trade war ends and if the United States rejoins TPP, U.S. agriculture could see not only the gains of the past decades reinforced, but could also realize the potential for additional trade gains.

Resource Details (Export Citation) GTAP Keywords
Category: 2019 Conference Paper
Status: Published
By/In: Presented at the 22nd Annual Conference on Global Economic Analysis, Warsaw, Poland
Date: 2019
Created: Tyner, W. (4/8/2019)
Updated: Chepeliev, M. (8/6/2019)
Visits: 2,556
- Agricultural policies
- Multilateral trade negotiations
- Preferential trading arrangements

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