The Ag Economists’ Monthly Monitor reveals 83% of economists believe the U.S. can reduce reliance on China, albeit with difficulty.

“There’s always the opportunity to reduce reliance on another nation, but it will take time and could be painful,” one economist noted.

Some say tariffs leave farmers with no choice but to shift away from China, while others warn that ignoring comparative advantage will make the U.S. worse off. Conversely, 17% argue China is too critical a buyer to replace in the near term.

Agriculture in a Recession? The April Monitor suggests agriculture is in a recession, with 72% of economists agreeing. U.S. ag remains heavily reliant on China for key chemical imports, making full independence from China nearly impossible. Some experts argue reducing reliance on Chinese imports is misguided.

Opportunities Amid Uncertainty: Despite risks, 61% of economists believe the U.S. and China will renegotiate the Phase One trade deal, which once committed China to purchasing an additional $200 billion in U.S. ag products. Though the deal stalled after Trump’s election loss, China made record corn purchases in 2020. Since then, Brazil has overtaken the U.S. as the top corn exporter, capitalizing on shifting trade dynamics.

Winners and Losers: Brazil stands to gain the most from this trade turbulence (76% of economists). Other beneficiaries include China (12%), India (6%), and Ukraine (6%), while none expect the U.S. to come out ahead.
Potential winners within U.S. agriculture include specialty crop producers, livestock farmers seeking increased European market access, biofuels, and cotton producers suffering from trade instability.

Path Forward: The best strategy for U.S. agriculture is to negotiate lower global tariffs (47%) or build domestic demand for ag products (32%). Restoring American manufacturing is a challenge—47% believe it will never fully recover, while others estimate a 5-to-10-year timeline.

Ultimately, unless the U.S. invests in domestic production and expands trade agreements, agriculture may take a lasting hit from the trade war. However, if the Trump administration secures broader global trade access, the potential rewards could be significant.

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Under the terms of the partial trade arrangement, Chinese spending on U.S. farm goods will scale to an annual figure of $40 billion to $50 billion over two years, Treasury Secretary Steven Mnuchin has said.

U.S. ag exports to China peaked at roughly $25 billion under the previous White House administration.

China wants a rollback in tariffs in the trade war before it can feasibly agree to buy as much as $50 billion of American agriculture products. China will continue to make goodwill purchases between now and mid-November, according to Politico. That is when Trump meets with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation summit in Chile.

The intent is for China to scale up its purchases to record levels in 2020. By 2021, Beijing will have removed non- tariff barriers tied to food safety and GMO approvals, opening China’s floodgates to a surge of U.S. farm goods.

Chinese firms this year have bought 20 million tons of U.S. soybeans and 700,000 tons of pork, and that is expected to accelerate.

Also on China’s shopping list: cereals, cotton, ethanol, fertilizer, juice, coffee and meat. The country could also lift barriers on distillers dried grains and remove a ban on chicken imports.

China has also indicated that any increase in imports will depend on market demand, as well as compliance with global trade rules and the removal of U.S. tariffs.

Sources: Politico, Bloomberg