Effects of Tariffs and the Exchange Rate

Exports of U.S. chicken feet to Hong Kong and mainland China have been inconsistent with announced policies of a controlled floating exchange rate between the U.S. and Chinese currencies and a Chinese tariff on U.S. poultry imports. Analysis by UGA agricultural and applied economists reveals that the effect of the exchange rate policy is being lessened by a diversion of imports from mainland ports to Hong Kong and that the reduced exports to the combined China/Hong Kong market are more consistent with an unannounced quota policy than a tariff policy. The China/ Hong Kong market is extremely important to U.S. agricultural producers but economic conditions and the policy environment are ever changing. It is easy to be misled by announced policies or a focus on a narrow set of impacts. This study demonstrates that the market for U.S. chicken feet exports is quite different than the market for other chicken parts and emphasizes the extra complexity associated with the special characteristics of the China/ Hong Kong market.