TITLE:
A Study on the Effects of U.S.-China Trade War on the U.S. Soybean Market
AUTHORS:
Yun Feng (Benson) Xie
KEYWORDS:
Soybean, US-China Trade War, ARIMA Model, Social Welfare, Dead Weight Loss
JOURNAL NAME:
Modern Economy,
Vol.15 No.8,
August
28,
2024
ABSTRACT: A theoretical framework was set up and utilized charts to analyze the effects of the U.S.-China trade war on the U.S. soybean market. Then, we collected data from the United States Department of Agriculture’s (USDA) website and established an ARIMA model to estimate the effects of the trade war on the U.S. soybean prices and calculate the impact on social welfare. Two scenarios are created for analysis: one baseline scenario with the actual U.S. soybean prices after July 2018, which includes the impacts of the trade war, and a counterfactual scenario with the prices forecasted by the ARIMA model using historical prices before July 2018, excluding the impact of the trade war. Our findings indicate that the trade war constrained the U.S. soybean export to China thus lowering U.S. domestic soybean prices. Furthermore, the trade war increased the consumer surplus, however, it reduced the producer surplus in the U.S. soybean market. As a result, a Dead Weight Loss has been incurred.