U.S. Agricultural Exports Face Uncertainty Amid Tariff Concerns with China
Renewed tariff tensions between the U.S. and China pose a risk to American agricultural exports. Following Donald Trump's potential return to office signal in January and his suggestion of implementing a 60% tariff on Chinese goods to support U.S. production, experts are warning of possible consequences for U.S. agricultural trade. China, the largest market for U.S. agricultural products, experienced a 20% decline in imports of these goods in 2023, and this downward trend is expected to continue in 2024.
In 2023, China imported $34.05 billion worth of U.S. agricultural products. Despite the decline, sector leaders and traders still view the Chinese market as "irreplaceable" while seeking alternative markets to offset decreasing demand. A significant shift occurred in soybeans, a crucial U.S. export; China's market share of American soybeans dropped from 40% in 2016 to 18% in 2024 as China turned to Brazil for cheaper and abundant supplies.
Historically, the U.S. has been China's primary corn supplier, but after Beijing approved corn imports from Brazil in 2022, Brazil quickly surpassed the U.S. to become the largest supplier. While U.S. corn exports to China reached $2.6 billion in 2023, competition from Brazil is notable. U.S. meat and offal exports also fell to $3.3 billion in 2023 due to lower domestic demand.
Cotton exports to China, which accounted for a quarter of U.S. shipments in terms of value last year, dropped from $3 billion in 2022 to $1.66 billion in 2023 due to economic challenges reducing textile and apparel demand. Similarly, U.S. sorghum exports to China fell from $1.52 billion in 2014 to $867 million in 2023, influenced by competition from Argentina and Australia and the influx of cheaper Brazilian corn.
China's wheat imports from the U.S. also decreased, recording the lowest amount in the past three years with $319 million in purchases in 2023. This decline occurred as China increased domestic production and secured abundant supplies from other countries, although high-protein wheat imports for certain food products remain necessary.
The Chinese government has expressed a desire to expand cooperation rather than engage in another trade war. Meanwhile, China continues to diversify its agricultural resources and boost domestic production to enhance food security. The potential for China to retaliate with tariffs in response to Trump's proposed measures could further impact U.S. agricultural exports to this significant market.