Rice Trade: U.S. Industry Stands to Lose from Trump Tariffs

Rice harvest. ©Debra L Ferguson Stock Photography

The U.S. rice industry could suffer from retaliatory tariffs in response to proposed steel and aluminum import tariffs, according to a study released last week by economists at the University of Arkansas (UofA) System Division of Agriculture. 

The UofA analysis estimates the impact on U.S. rice if trading partners Canada, South Korea, Mexico, Turkey, Japan, Taiwan, and the European Union retaliate in response to a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports recently announced by President Donald Trump.

Within days of the President’s announcement, the EU published a list of imports from the United States, including rice, which could be subject to retaliation.  The EU has not moved beyond refining this list (still including rice) while top officials of the EU Commission explore with their U.S. counterparts possible exemption of the EU as a whole or for certain steel and aluminum products from the EU.

The United States exported 58,000 metric tons of rice to the EU last year, valued at $42 million.

“We estimate total U.S. rice production and exports drop 1.3 percent and 3 percent, respectively, and domestic consumption increases marginally, as a result of the implementation of import tariffs on U.S. rice,” stated the economic analysis report.

According to the report, while lower rice prices could benefit consumers by $66 million, lower prices could also negatively affect U.S. rice producers to the tune of $118 million. 

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The analysis focused on the potential effect of retaliatory tariffs for Arkansas overall (including rice), estimating that the state could lose $383 million, as well as 4,428 jobs and $261 million of labor income.

“This analysis shows the potential downside for our industry from higher U.S. tariffs on products far from rice and agriculture,” said USA Rice COO Bob Cummings.

“The higher duties are effective March 23 and the administration over the weekend announced procedures for importers of specific steel and aluminum products to claim an exemption, so it’s early to quantify the impact of the President’s action.

U.S. agriculture exports are an easy target for retaliation and affected countries could adopt the U.S. national security argument and restrict farm imports in response.  The consequences of protectionism are rarely good for U.S. agriculture,” concluded Cummings.

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