After months of little movement, U.S. agriculture is beginning to see signs that Chinese soybean purchases are picking up again. But with U.S.-China tensions continuing to simmer, questions remain about whether those commitments will hold.
Speaking Friday at the Iowa Economic Summit hosted by the Iowa Farm Bureau, former U.S. Trade Representative Bob Lighthizer said farmers should expect China to honor its recent agricultural purchase commitments, for now. However, he cautioned against relying on China as a cornerstone export market over the long haul.
Lighthizer says U.S. agriculture has long viewed China primarily as a customer, but warns that perspective is outdated. He says Beijing increasingly views the U.S. as a geopolitical adversary, fundamentally changing the long-term outlook for agricultural trade.
China recently committed to purchase at least $17 billion in U.S. ag products, in addition to buying 25 million metric tons of U.S. soybeans annually for the next three years. The former trade representative says as long as President Trump keeps the pressure on China, he thinks they will live up to that commitment.
“I think that China will live up to it in the short term,” Lighthizer says. “If you’re depending long term on China as a key part of your export market, there’s a lot of risk. Just an enormous amount of risk. That’s geopolitical risk and economic risk, and their own domestic policy is contrary to being dependent on these kinds of imports.”
‘Take Off the Rose-Colored Glasses:' Lighthizer’s China Warning for Farmers
Lighthizer acknowledges China remains an important market for U.S. agriculture, but says producers need to view the relationship through a more realistic lens. When asked if China is a market that’s still worth going after, Lighthizer said, “I would say, yes, but you got to be clear-eyed, you got to take off the rose-colored glasses.”
He says one thing U.S. farmers have to realize is China does not want to do something to help America because of the geopolitical rivalry.
“China, for perfectly valid reasons, doesn’t want to be dependent on imports. And China has other reasons to favor Brazil. There are kind of geopolitical reasons for that. So, in the meantime, my advice is take advantage, sell and do what you can, but realize that long range, you’re going to have to figure out an alternative.”
While unpredictable events, such as African swine fever outbreaks, can quickly change China’s import needs, Lighthizer says farmers should not assume China will remain a dependable long-term buyer.
Agriculture Still Bears the Brunt of Trade Disputes
Lighthizer also argues agriculture continues to be one of the sectors most frequently caught in the crossfire of global trade disputes.
“No group is discriminated against more when it comes to trade than agriculture,” he says.
That concern extends beyond soybeans.
According to the U.S. Meat Export Federation, red meat exports continue to face significant barriers in China. U.S. pork currently faces a combined tariff of 47%, while U.S. beef faces a 22% tariff.
Those challenges are one reason the meat industry is supporting the proposed “board of trade” concept included in the latest U.S.-China agreement, which aims to improve market access and address longstanding trade barriers.
For now, Lighthizer’s message to farmers was straightforward: capitalize on the opportunities that exist today, but begin preparing for a future where China may play a much smaller role in U.S. agricultural exports.
