U.S. agriculture depends on international markets. The U.S. has long been a proponent of developing opportunities for trade through bilateral, regional, and multilateral economic integration. Recent events, including the Trade War between the U.S. and China, the United States-China Economic and Trade Agreement (Phase One trade deal), the renegotiated United States-Mexico-Canada Agreement (USMCA), the U.S.-Japan Trade Agreement on Beef and Beef Products, and the potential for a comprehensive free trade agreement between the U.S. and the United Kingdom (UK), create uncertainty regarding their implications for U.S. agriculture. The U.S. decision to rejoin the Paris Accord produces additional uncertainty on the environmental front that will affect U.S. agricultural trade, both regarding the reaction of countries that are destinations for U.S. agricultural products and the U.S. ability to compete through the elimination or reduction of environmental regulations. The tremendous economic growth in the United States also adds to U.S. purchasing power, likely exacerbating the Chinese trade surplus with the United States further. At the same time, income growth in Asia drives the growing demand for U.S. fiber, food, and full products. Although there is much evidence of a change in the stance of the U.S. concerning international trade, it is essential to note that the global context is also changing. This can be seen with Brexit, as the UK voted to secede from the European Union (EU), which created the need to renegotiate and modify numerous trade agreements involving the UK and the EU. The UK will be forced to develop or renegotiate pacts with the U.S., our competitors, and our customers. In addition, the Russian invasion of Ukraine has created additional uncertainty in international markets that can have widespread implications for U.S. agricultural producers and consumers.

The problem that comes to the fore is that it is often unclear what the implications of these actions will be for agriculture and related interest groups. With U.S. agricultural output growing faster than domestic demand for many products, U.S. farmers and agricultural firms have relied on export markets to sustain prices and revenues. As a result, U.S. agricultural exports have grown steadily over the past quarter century, reaching $177 billion in 2021, up from $66.5 billion in 1996. The product composition of agricultural exports shifted at roughly the same time, reflecting changes in global supply and demand. Most notably, exports of consumer-oriented products, including high-value products (HVP) such as dairy products, meats, fruit, and vegetable, showed remarkable growth driven by increasing population and income worldwide, as well as a growing diversification of diets. U.S. agricultural imports also expanded steadily over the past quarter century, primarily driven by growing domestic demand for an array of consumer-oriented products. Between 1996 and 2021, total agricultural imports more than quadrupled in value, reaching $171 billion in 2021. Consumer-oriented products have dominated U.S. agricultural imports and have grown faster than total agricultural product imports, increasing on average by nearly 7 percent annually since 1996. Increasing demand for year-round food variety has driven imports of horticultural products during the offseason in U.S. production. Horticultural products (including fruits, nuts, vegetables, and beverages) accounted for over half of U.S. agricultural imports in 2021. Sugar and tropical products (such as coffee, cocoa, and spices) accounted for approximately 15 percent of imports.

Given the importance and growth of international agricultural trade for U.S. agriculture and the U.S. economy, there is a need to determine the specific consequences for agricultural trade of these actions mentioned above. These implications include trade creation, destruction, diversion impacts, price, quantity, and welfare implications for various interest groups, including agricultural producers, agribusiness, consumers, and the environment. The principal benefits of this research include information about trade, supply response, import demands and export supplies, land values, price variability, agricultural value added, food safety, the environment, and emerging bio-energy issues. Improved competitiveness of the U.S. in international food and agricultural trade is expected to strengthen the employment base and increase income levels in respective states.

Research conducted within the proposed project addresses USDA Strategic Goals 1 “Ensure America’s Agricultural System is Equitable, Resilient, and Prosperous” and 2 “Foster an Equitable and Competitive Marketplace for All Agricultural Producers.” Previous multistate projects have focused on developing and modifying domestic agricultural legislation through the Farm Bill. While analysis of new domestic farm legislation will still be an essential objective of this project, the shifts in U.S. trade policies could have implications for all groups and sectors associated with U.S. agriculture. With these changing conditions and potential renegotiation or withdrawal from existing trade agreements, the objectives of this research also focus on the emerging issues and opportunities associated with agricultural trade and the global market environment during the next decade.

If this type of analysis does not go forward, stakeholders will have incomplete information concerning the economic impacts of changes in agricultural trade and the global market environment. While various commodity groups may have analysts who investigate their specific commodities and the related policies, the proposed work in this multi-state project will bring together a team of researchers to assess trade and policies across multiple commodities and products. The list of policy and trade issues available for research is long. Researchers can select a relevant subset focusing on the most current, critical issues with multistate collaboration. In so doing, the analysis provides results that transcend state lines. In addition, individual researchers will apply different methods and models to a selected trade or policy issue. The collective results will give a perspective that addresses the multi-dimensional aspects of an issue.

The work proposed here will contribute to understanding agricultural trade and policy. As a group of researchers from multiple institutions, this work’s output will address the various needs of the agricultural community and policymakers. As these constituencies are interested in a diverse group of products and policies both nationally and internationally, the collaboration of this project will address many of these different interests. The analysis will advance the science of economics of trade and policy in agriculture with new empirical techniques and new data. The outcomes of this research are expected to have positive consequences for numerous stakeholders associated with the U.S. food and agricultural sector. This includes agricultural producers, consumers, agribusiness firms, rural communities, policymakers, farm organizations, and related constituencies to have the information necessary for informed decision-making and policy design.