Trade with China - The Good News
The White House said President Trump’s summit last month with Chinese leader Xi yielded a Chinese commitment to purchase at least $17 billion annually in U.S. agricultural products over the next three years. The commitment is in addition to an earlier one by China to purchase 25 million metric tons of soybeans. The agreement includes restoring market access for U.S. livestock products and reciprocal tariff reductions intended to facilitate trade. Yet China has remained silent on the deal. The Chinese Ministry of Commerce has said there is an agreement "in principle" to reciprocal tariff reductions but has not confirmed specific purchase commitments. And the Chinese Embassy in Washington would not confirm the amount or the time frame. The silence has created uncertainty as to the exact details of the deal.
Nebraska agricultural producers stand to benefit from the deal if it comes to reality. It is estimated the purchase commitment could raise U.S. total farm exports to China to $28-$30 billion a year. While less than earlier in the decade, the amounts are much higher than last year’s exports to China of around $10 billion. Soybeans have already seen additional Chinese purchases under the previous commitment. Corn and sorghum are expected to see gains from the latest deal. Beef, too, should see increased purchases. China has already restored market access for beef since by renewing expired plant registrations for processors and approving registrations for new facilities. Plant registrations had been allowed to lapse in 2024. China had grown to be the third-largest market for U.S. beef before the registrations lapsed.
Figure 1. U.S. Ag Exports to China and Recent Commitments
The White House said the agreement also calls for the establishment of two bilateral boards aimed at strengthening the economic ties between the two countries. The Board of Trade will identify non-strategic goods eligible for tariff elimination on up to $30 billion worth of trade. The Board of Investment will provide recommendations on non-strategic, non-sensitive sectors where Chinese investment in the U.S. could proceed without additional review.
Previous agreements with China have resulted in increased purchases of U.S. agricultural goods, although the country hasn’t always followed through fully on its commitments. And previous deals haven’t included enforcement mechanisms if either party doesn’t live up to the terms. It’s unclear whether they are part of the latest deal. Last week the Trump administration said it intends to impose additional tariffs on China and other countries. Many chapters are left to be written over the next several months in the story of U.S. agricultural trade with China. Time will tell if the agreement results in increased sales of U.S. agricultural products.