China Threatens All US Agriculture

China Threatens All US Agriculture

August 8, 2019

Trade War Escalates Into Worse Case Scenario

This week, China announced that state-owned companies have suspended purchases of U.S. agricultural products.  Additionally, China may impose import tariffs on newly purchased U.S. agricultural products after August 3. This announcement, so far, does not pre-empt purchases from non-state-owned enterprises.

The Chinese Ministry of Commerce says that this action is in retaliation for the proposed ten percent tariffs announced by the U.S. on $300 billion of Chinese imports, which may be in place on September 1.

A trade meeting between US Trade Representative Robert Lighthizer, US Treasury Secretary Steven Mnuchin and Chinese officials was held last week in China. The goal of the meeting was to restart the trade negotiations that had ended in May. Another meeting is planned for early September.

In 2017, California farmers/ranchers exported $2.27 billion in agricultural products to China/Hong Kong. The market ranked third for California farm exports, behind the European Union ($3.4 billion) and Canada ($3.3 billion).

Top California farm exports to China in 2017 were:

Pistachios - $663.3 millionAlmonds - $500.8 millionWine - $185.3 millionDairy and products - $174.9 millionOranges and products - $123.8 million

The full list can be found here, on Page 11 of the 15-page PDF file. 
Lastly, USDA recently rolled out updated trade data that indicated the U.S. exported $19.5 billion of agricultural products to China in 2017.  As a result of retaliatory tariffs, agricultural exports were reduced to $9.1 billion in 2018 and have continued to decline, with a $1.3 billion drop in the first half of 2019. 
Source: CFBF Federal Policy Division