Trade War Truce Won’t Restore U.S. Farmers’ Soybean Market in China

The recently announced 90-day trade truce between the U.S. and China, which includes tariff reductions, will not help American farmers regain their footing in China’s soybean market, according to producers. Despite the U.S. lowering tariffs on Chinese goods from 145% to 30% and China reducing duties on U.S. imports from 125% to 10%, Brazil maintains a competitive edge due to its tariff-free status and record harvest. China, the world’s largest agricultural importer, sources about 70% of its soybeans from Brazil, while the U.S. accounted for only 28% of China’s soybean imports in the 2022/2023 season.

Caleb Ragland, a farmer from Magnolia, Kentucky, and president of the American Soybean Association, emphasizes that the remaining 10% tariff on U.S. soybeans is still a significant burden. “Products from our competitors in Brazil and Argentina are not weighed down by these extra costs,” he notes. Brazil, capitalizing on the trade war during Donald Trump’s presidency, has strengthened its position, and according to Luis Rua from Brazil’s Ministry of Agriculture, the country plans to expand exports of not only soybeans but also sorghum, pork, and poultry to China.

U.S. farmers are hopeful that ongoing trade negotiations with China will boost demand for their products. Some growers are ready to make advance sales of their autumn corn and soybean harvests if prices rise due to increased orders. However, farmers reduced soybean plantings this year compared to last, as the crop appeared less profitable than corn. The truce is set to expire just as the U.S. harvest begins, a critical time for exports, and farmers fear that without further concessions, China will continue to favor South American suppliers.

The trade war initiated by Trump has already caused significant losses for U.S. farmers. In 2018, China sharply cut purchases of American agricultural products, forcing the Trump administration to provide billions in aid to farmers. Yet, the 2020 “Phase 1” trade deal, intended to restore exports, was not fully honored by China, deepening farmers’ frustration. “The situation was bad before the war started, and it’s still bad,” says Ron Heck, a farmer from Perry, Iowa.

The current truce fails to address core issues, notably the U.S. trade deficit with China, which continues to frustrate farmers. Dan Henebry, a farmer from Buffalo, Illinois, expresses skepticism: “We’re back at the plate, trying to figure out if we’ll hit a home run or strike out again.” Beyond soybeans, China has also reduced purchases of U.S. wheat, favoring suppliers from Australia and Canada, who recently sold 400,000 to 500,000 metric tons. Without significant tariff reductions or additional incentives, U.S. farmers risk permanently losing market share to Brazil.

Tags: China, corn, soybean, USA