President Joe Biden has chosen to leave in place US tariffs imposed by his predecessor in 2018 on $350 billion worth of Chinese goods. In turn, Beijing left its retaliatory tariffs on some agricultural products, including soybeans, and some US-made products.
Chinese tariffs are hurting American farmers by making US-grown soybeans more expensive for Chinese buyers, who bought the majority of US exports before the trade war.
“We’ve been living with tariffs for so long, it’s just the way we do business now,” said Dave Walton, an Iowa farmer who saw his soybean prices plummet after restrictions were put in place. prices in 2018.
His farm is located near the Mississippi River, where his soybeans are typically loaded onto a barge and then shipped overseas after reaching the Gulf of Mexico. This location facilitated the export of his harvest.
But this year, Walton is trying to rely less on overseas buyers. Instead of exporting his soybeans, he sells them to a national company which will use the harvest as seed.
Walton remains frustrated with the Biden administration for leaving U.S. tariffs in place. If trade tensions ease, Beijing could also lift tariffs on US soybeans. He is also frustrated that the administration has so far failed to appoint people to two key agricultural trade positions: the role of chief agricultural negotiator in the office of the U.S. Trade Representative and the position of deputy Secretary of Commerce at the United States Department of Agriculture remain open.
“It signals to me that trade is not a priority for the administration. If it was a priority for them, they would have these trade positions filled and they would be working on updating the trade agreements with China and other countries,” he said. .
Biden leaves tariffs in place
In 2020, a truce was reached between Trump and Chinese President Xi Jinping. Both sides have stopped adding new fares under what is known as the phase one agreement. Beijing has also agreed to increase its purchases of American goods and agricultural products.
Biden suggested earlier this year that China’s failure to meet commitments was the reason he was leaving tariffs in place.
“I would like to be able to be in a position where I can say that they meet the commitments, or more of their commitments, and be able to lift some of it. But we are not there yet,” said- he added. .
Impact on US soybeans
But soybean sales to China have nearly rebounded to pre-trade war levels. Soybean exports to China were only 1% lower in the year after the phase one agreement was signed compared to 2017, according to the USDA report.
Still, it’s hard to know what would have happened without the tariffs in place.
“The overall impact of tariffs on trade is much harder to pin down since the ceasefire,” said Joseph Glauber, senior fellow at the International Food Policy Research Institute and former chief economist at the USDA.
However, he thinks it is “obvious” for the United States to lift the tariffs. “It would help normalize the trade,” Glauber added.
Some farmers fear they have permanently lost some of their Chinese buyers who have turned to other countries for soybeans over the past four years.
While US exports to China increased after the phase one agreement was reached, exports from other countries grew even faster. As a result, the United States’ market share of China’s agricultural imports is now lower than it was before the trade war: around 17% in the first year of the first phase, compared to 20% in the first year. during the 2017 calendar year, according to the USDA.
There are also non-tariff barriers to trade imposed by China. Chinese commercial buyers need government approval to import US soybeans.
“Importers in China have to take steps to get access to American soybeans. There is clearly a cost to doing business,” Glauber said.
While Walton remains frustrated with the Biden administration’s lack of action on trade, he also said he’s worried about rising costs, particularly for herbicides.
“I’ve seen cases where the price of the herbicide has doubled or tripled. … We didn’t get our first choice, but we finally got a herbicide that we can use to protect our crop,” Walton said. .