United States corn and soybean farmers could lose billions of dollars in annual production value in the event of a potential new tariff-induced US-China trade war, according to a new…
Ag Producers Bracing for Potential China Trade War
Reuters’ Casey Hall, Brenda Goh and Mei Mei Chu reported last week that “U.S. agriculture producers are bracing for the prospect of a fresh trade war under U.S. President-elect Donald Trump again hitting exports of farm goods to China, but they said while any new tariffs would hurt, they felt better prepared.”
“China is the largest market for U.S … soybeans, the top U.S. export to China, but it has been trimming purchases. U.S. agricultural exports to China fell 24% last year to $29.1 billion, according to the U.S. Department of Agriculture (USDA),” Hall, Goh and Chu reported. “That is expected to fall further this year but China will remain a key market, said Jason Hafemeister, USDA Acting Deputy Under Secretary for Trade and Foreign Agricultural Services.”
“‘It’s a concern,’ Hafemeister said,” according to Hall, Goh and Chu’s reporting. “‘Even in the last couple of years we’ve recognized the potential for disruption in U.S.-China trade so a lot of our efforts have gone into diversifying our markets,’ he told Reuters on the sidelines of CIIE.”
What Trump has Proposed
Reuter’s Tom Polansek reported last week that “Trump is threatening new tariffs on Chinese imports, and China is likely to reciprocate. That would lead to less access, not more, to China’s agriculture import market. Trump would also likely hit imports from other countries farmers would want to sell into with tariffs.”
“Trump, who beat Democratic Vice President Kamala Harris in the presidential election, has vowed to impose a 60% tariff on Chinese goods and at least a 10% levy on all other imports in his second term,” Polansek reported. “‘I think it’s terribly naive of anyone to think that the election of Trump and the Republican party will be positive for agriculture,’ said Jay O’Neil, a grain industry consultant and former economist at Kansas State University.”
“A new round of trade wars would come at a tough time. U.S. corn and soy prices tumbled to 2020 lows this year under pressure from massive harvests and intense competition for global export sales from rival supplier Brazil. That has hit the U.S. agriculture economy hard and reduced demand for tractors, combines and other agricultural equipment from companies like Deere & Co,” Polansek reported. “The nation is projected to face a record $42.5 billion agricultural trade deficit in 2025, according to the U.S. Department of Agriculture.”
“U.S. soybean exports to China fell to about 26.4 million metric tons last year from 36.1 million in 2016 and 31.7 million in 2017, before the last trade war, the agency said,” according to Polansek’s reporting. “Beijing failed to meet obligations for U.S. agricultural purchases under a 2020 trade deal signed with Trump to end the trade war, according to the Census Bureau.”
Trade with China Already Falling
Successful Farming’s Chuck Abbott reported Tuesday that “U.S. food and ag sales to Mexico surged by 7% during the 2024 fiscal year, making the North American neighbor the No. 1 ag export customer, according to Census Bureau data tracked by the USDA. China, the leader since the end of the Sino-U.S. trade war, fell to third place, behind Canada, in export purchases.”
“Shipments to Mexico totaled $30 billion, an increase of $2 billion from 2023, with purchases that included a record 24.5 million metric tons of corn, 40% of all U.S. corn exports for the year,” Abbott reported. “Canada bought $29 billion and China $25.7 billion of American-grown food and ag products.”
Industry Says Better Positioned to Mitigate Risks
Hall, Goh and Chu reported that “the U.S. farm industry has sought to expand into Southeast Asia, Africa and India, and beyond bulk grains to value added products, but China’s size and appetite are hard to replace.”
“‘It’s difficult to find another market that moves the needle, so you have to find many markets to even come close to that,’ said Ryan LeGrand, the U.S. Grains Council CEO,” according to Hall, Goh and Chu’s reporting. “Verity Ulibarri, a sorghum farmer in New Mexico who also chairs the U.S. Grains Council, said the industry has positioned itself to be able to mitigate trade war risks.”
“‘As we look to the future as to what may or may not happen, having that experience gives us more of a feeling of how to navigate that. We’re not scared, we know there are risks,’ Ulibarri said, referring to the 2018 trade war.”
