On January 15, 2020, the US and China shook hands and signed the Phase One Trade Agreement which the United States lifted tariff sanctions and reduced tariffs on $120 billion worth of Chinese products from 15% to 7.5%.

In return, China pledged to buy an additional $200 billion worth of U.S. goods and services over the next two years, including about $80 billion in U.S. agricultural products. There was a significant increase in China’s imports of agricultural products from the United States during this period.

In terms of corn, due to the clearance of temporary storage stocks, China began to import corn significantly in 2020, and the import volume of corn in the United States reached 4.34 million tons that year. In 2021, the import volume of corn from the United States increased rapidly to 19.83 million tons, and in 2022, it also was as high as 14.87 million tons.

This month, the National Corn Growers Association and the Soybean Association released a forecast that said U.S. soybean exports to China could fall by about 15 million tons a year, or more than 50 percent if the U.S. trade war with China resumes. Corn exports are expected to decline by 2.2 million tonnes. If China imposes new counter-tariffs in a new round of trade war, the losses in the aforementioned US agricultural areas will be even greater. And, as in 2018, U.S. agriculture is still unlikely to find enough new channels to cover these losses.

Sean Aretta, a senior economist at the U.S. Department of Agriculture, revealed that in the last round of the trade war between the two countries, U.S. agriculture suffered more than $27 billion in losses, which were eventually offset by government aid, but those years were extremely difficult for growers, and the long-term effect of the trade war was that the United States “permanently ceded a share of the Chinese market to Brazil.”

So, will agricultural trade between China and the United States decline again?

On November 6, the “Sino-US Agricultural Trade Cooperation Forum” jointly organized by the U.S. Soybean Export Council (USSEC), the U.S. Grain Council (USGC), and the China Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal Husbandry (CFNA) was held in Shanghai.

As one of the supporting on-site activities of the 7th China International Import Expo this year, the “China-US Agricultural Trade Cooperation Forum” aims to promote open communication and win-win cooperation between China and the United States, and promote cooperation between the two countries in the field of agricultural economy and trade. The forum was held in Beijing for the first time last year.

Jim Sutter, CEO of the U.S. Soybean Export Council, began the forum by expressing his expectations for the prospects of U.S.-China agricultural trade. “History has shown that agricultural exchanges are an important factor in strengthening international relations, not only facilitating exchanges between countries but also setting an example for other industries,” he said. The U.S. soybean industry, like other agricultural trade organizations, has a rich and active trade relationship with China. China is a very important partner for the U.S. soybean industry, and I am optimistic that the trade relationship between the two sides will continue to grow. ”

During the forum, the U.S. Soybean Export Association organized several soybean procurement and cooperation signing ceremonies, facilitating multibillion-dollar trade cooperation between U.S. and Chinese industrial partners.

Where is U.S.-China agricultural trade headed? There may still be high tariffs and a sharp backlash. But China and the United States have complementary agricultural trade and a deep foundation for cooperation, both sides are also suffering from the trade war. Let’s wait and see.

By Le Tianyu