China’s Import Tariffs on U.S. Soybean Exports 2018-2022: Effects on Information Transfer between Markets in China, the U.S. and Brazil
No Access Until
Permanent Link(s)
Collections
Other Titles
Author(s)
Abstract
This paper investigates the impacts of China’s import tariffs on U.S. soybean exports in mid-2018 on price diffusion and information transfer relationships between futures prices in the U.S., China, and Brazil. To assess the information transfer relationships, we use the Reduced Vector Auto-Regression (RVAR) model to generate pairwise tests on the causal covariate differences between the U.S., China, and Brazilian soybean futures prices before and after mid-2018. Results show that previous patterns of price signaling between the U.S. closing and Chinese opening soybean futures prices, and the Chinese closing and U.S. opening soybean futures prices, have all but evaporated since the import tariffs imposed on U.S. exports to China in mid-2018, and recovered only after January 2020. This import tariff provided a natural experiment on the effects of a tariff on price information transfers between different markets worldwide as global trade patterns in soybeans changed.