The incidence of foreign market tariffs on farmland rental rates

Abstract

We estimate the impact of tariffs faced by US agricultural exports on farmland rents. The localized tariff is determined by the average of tariffs across trading partners for the crops produced within the county. We utilize shift-share designs to avoid endogeneity concerns that arise because factors affecting rents could also affect trade flows and cropping patterns. Using the county-level data from 2008 to 2017, we find that a one percentage point decrease in the localized tariff increases rents by 3%–6%. The 2018 Chinese retaliatory tariffs would have decreased rents by about 3% in the absence of any government support.