Trade is always an important topic for American agriculture, given the role exports play in farmers’ bottom line, but the upcoming election puts issues of trade and tariffs even more in the spotlight.
Joe Glauber has served with the USDA and U.S. Trade Representative office working on ag trade, and he currently works with the International Food Policy Research Institute in Washington, D.C. He says U.S. ag exports have declined in value by $10 billion since 2022, reflecting crop price declines.
“A lot of that is due to price drops,” Glauber says. “That’s just reflecting the very large (crop) supply.”
In addition, major buyer China, the destination of 50% of U.S. soybean exports, has been buying more crops from Brazil. He says this can be due to China diversifying sources where it buys food to limit risk, Brazil becoming more competitive pricewise in global markets, and strength in the U.S. dollar hurting exports.
The Chinese market remains important for soybean growers around the world.
“China is two-thirds of the global import market for soybeans,” Glauber says.
He says Brazil is a top competitor with the U.S. on the soybean market. The U.S. has some advantages, such as American agriculture being very efficient and having a major river system to get crops from where they are grown to ports.
But while U.S. agriculture can’t bring many new acres into production, Brazil has been able to do that through more double cropping, but also through controversial deforestation to clear land, he says.
Glauber says crop prices will rise again at some point, and export values will go up with them.
“I’ve been at this a long time,” he says. “I’ve seen ag prices go up and go down. Ag prices are going to go back up at some point.”
Projecting policies
Trade policy has been one of the issues in the presidential campaign. Sharon Bomer Lauritsen is an ag trade policy consultant based in Washington, D.C., and from 2011-2020 she was the assistant U.S. Trade Representative for agricultural affairs.
“Obviously, we’ve all seen how much press coverage tariffs have gotten in this election,” she says.
Bomer Lauritsen says this election is somewhat unique in that one candidate, former President Donald Trump, has already been in office, and the other, Vice President Kamala Harris, is involved in the current administration and has pledged to largely continue current trade policy under President Joe Biden.
“Trump 1.0 hints at his policies in a potential second term,” Bomer Lauritsen says. “Harris 1.0 will look a lot like Biden policy this year.”
She says the Trump administration became involved in “trade wars,” particularly with China, as the administration pursued what it described as fairer trade policy between the two countries, ultimately leading to a “Phase One” trade agreement. She says during that time, the USDA handed out cash payments to farmers to help them navigate the choppy waters.
Bomer Lauritsen says China is reliant on importing food and having multiple sources they buy from helps give them some security.
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“I honestly think China is smart enough to try to diversify sources as much as possible,” she says. “They desperately need imported food.”
Glauber says the trade wars impacted both countries.
“2018 really was devastating,” he says. “It cut our soybean exports. … (The tariffs) hurt China as well, there’s no question. When they raise tariffs on imports coming in from the U.S., they had to pay more for soybeans. But we too were hit hard by that.”
Bomer Lauritsen says the trade wars did yield some results.
“We reached an agreement after some intense negotiations, getting China to import beef and more meat,” she says.
The Trump administration also included trade negotiations or re-negotiations with Japan, the United Kingdom, Kenya and North American countries.
Bomer Lauritsen says Harris would largely continue the Biden administration’s approach. She says Harris would likely engage more with the World Trade Organization and use the existing trade dispute system to solve disagreements.
Bomer Lauritsen says Harris would likely take a strategic approach to tariffs with China and not pursue large, comprehensive trade agreements with other countries, but rather work within existing frameworks. As a senator, Harris voted against the U.S.-Mexico-Canada Agreement, and Bomer Lauritsen says it was because of concerns the deal did not have strong enough environmental protections.
She says it is interesting to note the Biden administration has kept in place tariffs put on China by the Trump administration.
“The concern about China and national security issues is bipartisan, and it is real,” Bomer Lauritsen says. “In my view, keeping those tariffs in place was the right thing to do. There’s a real national security concern.”
Bomer Lauritsen says the two candidates would have different approaches to achieving the same goal of supporting trade.
“Trump 2.0, the ship is going to be going through a storm, but hopefully get through that storm and have meaningful trade negotiations that are beneficial for agriculture,” she says. “Harris would be less risky, more stability, but clearly a lower impact and taking longer to help U.S. agricultural exports.”
Transportation concerns
As trade policy discussions continue ahead of the election, a dry autumn and low water levels along the Mississippi River are a growing concern when it comes to getting crops to export markets.
Soy Transportation Coalition Executive Director Mike Steenhoek says water levels were good this summer before declining. Hurricane Helene provided a brief boost to water levels, but then they fell again.
Low water levels have led to draft reductions on the river, and Steenhoek says each foot of draft reduction means an individual barge is loaded with 7,000 fewer bushels of soybeans.
“In certain areas of the river, we are seeing several feet of draft restrictions due to low water,” he says.
These restrictions cut into how economical shipping on the river can be. Steenhoek says he is hopeful water levels will improve soon.
“At a time in which soybean exports are confronted with numerous challenges, it is our hope that our supply chain can encourage profitability rather than be one further impediment,” he says. “Unfortunately, we continue to experience numerous supply chain challenges. Low water on the Mississippi River is one compelling example of this.”
