51 Ate Today? Thank a Farmer. Better Farming | January 2025 tariff on imports from the country if they do not secure the border. Mexico is threatening to fight back with tariffs of its own. Like in his initial term though, there are likely to be provisions for exemptions and/or tax holidays for certain American companies, organizations, and industries that import from China. To help end the damaging trade war, China and the U.S. signed a Phase One trade agreement in January 2020, and it required China to purchase $80 billion of American ag during 2020 and 2021. Though the final purchase amount was only about three-quarters of that target, China did sharply increase their ag buying from the U.S. For example, U.S. pork exports rose by about 470% Y/Y in 2020. In marketing year 2023-2024, Mexico was the biggest ag trade customer of the U.S. and total exports to the country were valued at $30 billion, which was higher Y/Y by $2 billion, and included a record 24.5 million metric tons (MMT) of corn (making up 40 per cent of total 2023-2024 U.S. corn exports). China bought $25.7 billion of U.S. ag in 2023-2024. Due to China’s unsavoury experience with Trade War 1.0, they tried to reduce their ag dependence on U.S. commodities and looked to attain more of their requirements from the other major producers. They invested heavily in Brazilian ag companies and infrastructure, including ports and logistics. This led to a spike in Brazilian soybean production in recent years, to record highs as more Brazilian land area was brought under cultivation. Thus, China virtually set up a “captive” supply for their soybean needs, which is key for their ag sector. China also approved the import of Brazilian corn, which led to more global market share loss for the U.S. Among the U.S. commodities that could be affected the most by a possible trade war with China are soybeans, corn, and pork. One could also add beef, sorghum and cotton to that list. In the U.S., the National Corn Growers Association (NCGA) and the American Soybean Association (ASA) commissioned an economic study that pointed out that in the event of Trade War 2.0, U.S. soybean exports to China could drop by 52 per cent, while corn exports could fall by 84 per cent. Given that Brazil and Argentina compete with the U.S. on capturing global ag market share, they look to be well-placed to benefit from a U.S.-China Trade War 2.0. China is in a much different economic condition than the one it was in when Trump was president last. Their economy is struggling after their real estate sector went bust, and recent fiscal and monetary stimulus does not seem to be working. Their economy depends on exports and manufacturing, and not domestic consumption. So signing a deal with Moe’s Market Minute agcareers@agcareers.com 800.929.8975 www.agcareers.com AgCareers.com
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