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USDA publishes market facilitation models

The USDA’s chief economist has published the methods used to determine the breadth of the trade relief program.

Rob Johannson says the agency used standard models to estimate the impacts of trade tariffs.  “The models simulate the expected reductions in U.S. exports due to retaliatory tariffs, holding all other factors constant.”

He says all commodities listed to receive tariffs were evaluated for damage payments during the process.  “Some of the commodities such as more processed products like wine or ethanol were not included in the program.”

The calculations take the difference between 2017 trade values of commodities without the retaliatory tariff and the trade value with the retaliatory tariff from a particular country to find a measure of gross trade damage. The report says that number was then used as the purchase value in the food purchase and distribution program.  Payments to producers were calculated by dividing the gross trade damage value by 2017 production.

The report says if necessary, in December, a second payment will use the same approach and take into account other factors like new tariff rates or basis effects.