For the past couple years, the Trump administration and Chinese government have been entangled in a seemingly perennial tit-for-tat tariff war, with both parties issuing sanctions against the other. But in the past couple weeks, the White House and China have reportedly been collaborating to form a new trade deal that appeases both governments.
As part of the proposed deal, China would purchase an additional $30 billion worth of US agricultural goods annually. The primary crops include soybeans, wheat, and corn, but the deal has the potential to stretch to other agricultural goods.
According to joint data from the China Customs Administration and Bloomberg, China imported roughly $24 billion of agricultural imports from the U.S. in 2017. Because of retaliatory tariffs, this figure plummeted to just over $16 billion last year. If the two countries agree upon this $30 billion increase, it will work wonders for the U.S. agriculture industry.
In 2017, China was the United States’ second largest agricultural exporter market, so this deal is crucial for the industry. National Association of State Departments of Agriculture (NASDA) manager of public policy Alex Noffsinger emphasizes the importance of healthy communication with China.
“The China market has been incredibly huge for agriculture consistently for the past five years for U.S. agriculture exports; it’s an incredibly huge market,” Noffsinger said. “Something we’ve been watching and pursuing as a national association is ensuring the market access that U.S. agriculture has enjoyed over those years. At the end of the day, we’ve seen we can lose that market access overnight.”
According to the United States Department of Agriculture, the $138 billion of agricultural exports in 2017 generated an additional $179 billion in economic impact; combined, agricultural exports generated $317 billion for the US economy.
In addition, every $1 billion of exports requires roughly 8,400 jobs in different parts of the economy. Consequently, if the two countries can agree upon an additional $30 billion in imports, this could create hundreds of thousands of new jobs. And these aren’t exclusively jobs in farming; they also include jobs in factories, shipping, trade, and more.
Although the deal hasn’t been finalized, Noffsinger believes that agriculture will be central to an agreement with China. “This has been an incredibly lucrative market for U.S. agriculture, but it has the potential to be even greater,” Noffsinger said.
An improvement in U.S. agriculture imports is a subsequent improvement for both the U.S. economy and the Arizona economy; it’s an international trade win-win-win.