From the vast, fertile fields of Iowa and Illinois and several other farming states, US farmers used 30 million hectares of farmland to generate more than 48 million metric tons of soybean exports last year, worth $27.8 billion worldwide, according to the United States Department of Agriculture, or USDA.
The US is behind Brazil, second in the world in soybean production, creating 29 percent of the total global output, according to the USDA. China ranks fourth. The No 1 soybean export market for the US is China, which, in 2023 bought $15.06 billion worth of the versatile bean.
In the run-up to the 2024 US general election, the $124 billion soybean industry, which accounts for 0.6 percent of the country’s GDP, is closely watching any talk on trade policies by both presidential candidates, Vice-President Kamala Harris and former president Donald Trump, especially on tariffs.
Harris hasn’t revealed whether she will enact any new trade tariffs or keep the existing ones in place as President Joe Biden has done.
The Biden administration has kept most of his predecessor’s levies in place, and in May, raised some others on an additional $18 billion in Chinese imports, such as electric vehicles and semiconductors.
Trump proposed earlier this year a new set of trade tariffs of 10 percent across the board on foreign goods and 60 percent on goods from China if he wins reelection in November.
Soybean farmers are worried that any new tariffs could spark another trade war and further strain relations between the world’s two largest economies.
Josh Gackle, a third-generation farmer from Kulm, North Dakota, is president of the American Soybean Association. He farms 1,130 hectares of soybeans along with corn, wheat and barley.
“China is a very important trading partner, and we want to try and keep that happening,” Gackle told China Daily. “On new tariffs, free trade is probably always better.”
In 2018, the Trump administration enacted import tariffs ranging between 10 percent and 50 percent on approximately $283 billion of US imports. As a countermeasure, China imposed a 25 percent tariff on $50 billion worth of US goods in 2018, including pork and soybeans. This cost US agricultural producers around $27 billion in lost export revenue from 2018 to 2019, the USDA found. Around 95 percent was due to the trade war with China.
US farmers were given $61 billion worth of bailouts to offset the losses after US agricultural exports fell dramatically between 2018 and 2020, the Financial Times reported.
By 2019, a trade agreement was reached between the US and China steadying the industry.
Gackle said the trade war had “a big impact on US soybean producers, but we came back in phase one, and the administration and China worked together to try and build back some of that trade relationship and it happened”.
In a study about why tariffs hurt working people in the US by the Washington-based Peterson Institute for International Economics, or PIIE, the authors Kimberly Clausing and Mary Lovely argue that tariffs could actually end up stinging US families, farmers and exporters the most.
“Economists have long understood that tariffs burden domestic purchasers of imported goods because imports are the difference between domestic demand and domestic supply, a tariff affects both sides of the market,” according to the study.
‘Real distress’
Lovely is a professor emeritus of economics at the Maxwell School of Citizenship and Public Affairs of Syracuse University and a senior fellow of PIIE. She told China Daily: “During the 2017 to 2018 trade war, agriculture was negatively affected by China’s retaliatory tariffs. Former president Trump used tariff revenues to compensate farmers hurt by retaliation because the damage was big enough to cause real distress in some areas of the US.”
The 60 percent tariffs on Chinese goods proposed by Trump could increase household costs by $1,950, the conservative-leaning American Action Forum estimated.
The PIIE study also warned that import tariffs risk a loss of business as trade partners like China set up new contracts with other countries.
The billion-dollar US soybean industry relies on 500,000 people employed in some capacity, with total wages in the sector averaging $10 billion, according to a 2023 study called The Economic Impact of the US Soybeans and End Products on the US Economy, by the National Oilseed Processors Association and the United Soybean Board.
After the challenges brought on by the COVID-19 pandemic, producers are weary of anything that could destabilize things.
The US Soybean Export Council, or USSEC, represents the entire soy supply chain, including farmers, processors, commodity shippers, merchandisers, allied agribusinesses and agricultural organizations. It works to attain market access for the use of US soy for human consumption, aquaculture and livestock feed in more than 80 countries worldwide.
“China is so big, they take 60 percent of the soy that goes into global trade,” Jim Sutter, CEO of USSEC, told China Daily. “They’re a huge market. If you don’t have them, it’s a problem.
“We went through a lot of pain as a soy industry and as a country in the last trade war. Let’s learn from that.”
belindarobinson@chinadailyusa.com