Using the 2018 US-China trade war as an exogenous source of variation in future and spot soybean prices, we estimate the causal impact of the bilateral conflict on soybean export premiums in Brazil (port of Paranaguá), the world’s largest commodity producer. Synthetic control estimates with different counterfactual groups indicate that the trade war had a positive and relevant impact on soybean export premiums in Brazil, estimated at 44.7 USD/ton (2.68 USD/bag) or 122 cents/bushel. Taking into account Brazil’s total soybean exports during July-November 2018 (32.9 million tons), we estimate a direct economic impact of USD 1.47 billion [between 0.987 and 1.990 USD billion]. The findings are robust to alternative time windows around the intervention and several placebo tests. Our research quantifies trade war spillovers and helps policymakers understand the unintended consequences of bilateral sanctions and trade wars.
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