SHANGHAI: US agriculture producers are bracing for the prospect of a fresh trade war under US 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.
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 officials.
The sector is still reeling from up to 25 per cent tariffs Beijing slapped on US farm imports from soybeans to sorghum during the 2018 trade war in retaliation against duties imposed by the Trump administration.
China is the largest market for US farm goods and is its biggest customer for soybeans, the top US export to China, but it has been trimming purchases. US agricultural exports to China fell 24 per cent last year to US$29.1 billion, according to the US Department of Agriculture (USDA).
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. “Even in the last couple of years we’ve recognised the potential for disruption in US-China trade so a lot of our efforts have gone into diversifying our markets,” he told Reuters on the sidelines of CIIE.
Trump, who clinched a win in this week’s presidential election, has floated a blanket 60 per cent tariff on Chinese goods, with American agriculture exports widely expected again to be a key focus of China’s retaliation.
“They need food, we produce a lot of food … We hope that things don’t spin out of control and that things stay proportionate,” Hafemeister said.
The US 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 US Grains Council CEO.
Verity Ulibarri, a sorghum farmer in New Mexico who also chairs the US 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.
Trump’s election win sent China’s soymeal and rapeseed meal future contracts rallying on Thursday.
“It looks like almost everything is on the table,” said Allan Garbor, chair of the AmCham Shanghai business chamber. “But personally, I would say, we really hope that the area of food and agriculture is a safe area for everybody.”
