SHANGHAI: US agricultural producers are bracing for the prospect of a new trade war under US President-elect Donald Trump again hitting agricultural exports to China, but they said that while new tariffs would hurt, they felt better prepared.
Several US growers of crops from almonds to soybeans are in China this week for the China International Import Expo (CIIE), an event aimed at encouraging import purchases, and to meet with officials.
The sector is still reeling from tariffs of up to 25 percent that Beijing imposed on U.S. agricultural imports from soybeans to sorghum during the 2018 trade war in retaliation for tariffs imposed by the Trump administration.
China is the biggest market for US farm goods and is its biggest customer for soybeans, the biggest US export to China, but it has reduced purchases. US agricultural exports to China fell 24 percent last year to $29.1 billion, according to the US Department of Agriculture (USDA).
It is expected to fall further this year but China will remain a key market, said Jason Hafemeister, USDA’s acting undersecretary for trade and foreign agricultural services.
“It’s a concern,” Hafemeister said. “Even in recent years, we’ve recognized the potential for trade disruption between the US and China, so much of our effort has gone into diversifying our markets,” he told Reuters on the sidelines of the CIIE.
Trump, who won in this week’s presidential electionhas imposed a total tariff of 60 percent on Chinese goods, with US agricultural exports widely expected to once again be a central focus of China’s retaliation.
“They need food, we produce a lot of food … We hope things don’t get out of hand and things stay proportionate,” Hafemeister said.
The U.S. agricultural industry has sought to expand into Southeast Asia, Africa and India, and beyond bulk grains into value-added products, but China’s size and appetite are difficult to replace.
“It’s hard to find another market that moves the needle, so you have to find a lot of markets to even come close to that,” said Ryan LeGrand, US Grains Council CEO.
Verity Ulibarri, a New Mexico sorghum grower who also chairs the US Grains Council, said the industry has positioned itself to mitigate trade war risks.
“When we look at the future in terms of what may or may not happen, that experience gives us more of a sense of how to navigate it. We’re not afraid, we know there are risks,” Ulibarri said referring to 2018 trade war.
Trump’s election victory sent China soybean meal and canola meal futures contracts rallying on Thursday.
“It looks like almost everything is on the table,” said Allan Garbor, chairman of the AmCham Shanghai Chamber of Commerce. “But personally, I would say, we really hope that the area of food and agriculture is a safe area for everyone.”
