Can farmers survive without China?
Many of the ag economy’s woes can be tied to skyrocketing input costs and plummeting trade with China. During an interview with Farm Progress, Agriculture Secretary Brooke Rollins blamed this year’s record ag trade deficit on President Joe Biden, saying he did not negotiate enough trade deals.
During that Oct. 15 interview, Rollins also called Biden out for “not enforcing” the Phase 1 trade agreement that required China to purchase an additional $200 billion in U.S. agricultural goods.
That deal, agreed to in late 2019, came right before the COVID-19 pandemic. In 2018, in the wake of the first Trump administration’s trade war with China, U.S. soybean exports plummeted to $3.12 billion. In 2020, despite global trade disruptions, U.S. soybean exports to China rose to $14.07 billion. That upward trajectory continued through 2022, when China purchased $17.92 billion of U.S. soybeans. Still, China did not come close to buying an additional $200 billion in U.S. ag goods.
Why China didn’t depends on who you ask. Some, like Rollins, point the finger at the Biden administration. Others say continued disputes on a host of issues doomed progress toward further agreements.
Regardless of the blame, a proposed Phase 2 agreement never happened during Biden’s term. By 2024, U.S. soybean exports to China had fallen to $12.64 billion. Still, China remained far and away the biggest export market for U.S. soybeans, accounting for more than half of all international sales.
This year, in the wake of the latest tariff war between the U.S. and China, soybean farmers have seen their largest export market basically disappear. As of mid-October, China had yet to order any soybeans from the United States.
The two nations have recently attempted to restart trade negotiations, though there has been little progress. Each potential breakthrough has seemingly been followed by another stumbling block.
“The bottom line for me is we can't continue to rely on China as one of our key trading partners,” Rollins said.
Wanted: New trade partners
The secretary is not alone in calling for the U.S. to pivot away from China. During a September panel discussion at Husker Harvest Days, Nebraska Gov. Jim Pillen, a Republican, said the time had come to “stop buying stuff from China” and recognize “what a foreign adversary” it is. Among the reasons he cited is the fact that China is “working together” with Russia, Iran and North Korea, three nations that have been antagonistic toward the U.S.
Pillen cited recent progress toward a trade deal with Japan as an example of how the U.S could survive without China. He had high praise for Tokyo, calling it the cleanest place you will find.
“It’s maybe almost as safe as what we have here in Nebraska,” Pillen said, praising the nation for its discipline, civility and lack of obesity. “It’s a country that we need to be primary partners with and doing business.”
While it’s doubtful a correlation between a nation’s per-capita body weight and purchase of exports can be quantitated, there is no doubt that more trade with Japan would be welcome news for farmers. That nation has the world’s fourth-largest economy and a positive relationship with the U.S.
Rollins agreed that the key to helping farmers with international trade lies in striking deals with new markets. She credits President Donald Trump for being directly involved in framing new trade deals with Japan, Indonesia, Taiwan, the United Kingdom and the European Union.
While Rollins acknowledged it will take a “little while” for the markets to adjust, she said she’s confident it will happen. And when it does, she said there will be much less volatility for soybean farmers, sorghum producers and others.
“These are really significant policy issues and discussions that now are coming to the forefront, thanks to President Trump’s leadership and him being unwilling to accept the status quo on any of this,” Rollins said. “He’s truly making history, but in the best way, and putting America first. And that’s why I think this China question in the short term is really tough for farmers. But in the long term, I think the president’s commitment is to do everything he can to solve for it, so that they’re not in this position again.”
If not China, then who?
China’s 1.4 billion people account for more than 17% of the world’s population. By comparison, the combined populations of Japan, Indonesia, Taiwan, the U.K. and the EU is only 950 million. That population difference is over 100 million people more than the entire population of the United States.
The Trump administration promises more trade deals will come. In the past week, news began to leak that the U.S and Argentina are working toward a trade deal. Rollins said that might help some row crop farmers.
However, the deal does not come without controversy. In September, the U.S. provided Argentina with $20 billion in financial support to stabilize its economy. Almost immediately, Argentina briefly suspended its commodity tariffs and China promptly bought over a million tons of its soybeans. This occurred during a time when U.S. soybean exports typically ramp up.
In a public statement following that news, Caleb Ragland, American Soybean Association president, called on the Trump administration to secure a trade deal with China. He noted that China is not only the top U.S. export market, but also the world’s largest soybean consumer.
According to Ragland, the lack of U.S. exports to China is a direct result of the 20% retaliatory tariffs imposed by China in response to U.S. tariffs. This, he said, has allowed Brazil and Argentina to capture market share at the direct expense of U.S. farmers.
“The frustration is overwhelming,” Ragland said on Sept. 24. “U.S. soybean prices are falling, harvest is underway, and farmers read headlines not about securing a trade agreement with China, but that the U.S. government is extending $20 billion in economic support to Argentina, while that country drops its soybean export taxes to sell 20 shiploads of Argentine soybeans to China in just two days.”
Playing favorites
Now less than a month later, the Trump administration is reportedly considering giving Argentina an additional $20 billion in financial aid. Trump has called its president, Javier Milei, his favorite president.
Uncoincidentally, Argentina will hold legislative elections Oct. 26. In recent opinion polls, Milei’s approval rating has dropped below 40%. If his party does not do well in the elections, he may not be able to pass much of his agenda. On Sept. 15, Trump told reporters the U.S. “won’t waste time” with Argentina if voters don’t support Milei’s party.
This does not sit well with House Ag Committee Ranking Member Angie Craig, D-Minn. She said Argentine assistance during a shutdown is a betrayal of American family farmers.
“This is such a slap in the face to family farmers who are hurting like crazy right now because of Trump’s trade war,” she said in an Oct. 15 social media post. “Donald Trump and Republicans are, literally, bailing out our competitor and leaving family farmers in the dust. It’s egregious.”
