A deepening of the US' agriculture trade deficit is a concern for many in the industry ahead of the 5 November election, as proposals of even more aggressive tariffs against China could further cut US soybean and corn exports.
Former president and Republican presidential candidate Donald Trump has made reducing the overall US trade deficit a key issue of his campaign, vowing to subject all imports from China to punitive tariffs. In September he told the American Farm Bureau Federation (AFBF) that he intends to "permanently end our reliance on China for all critical goods and strengthen domestic Buy American and Hire American policies" if elected president.
Trump has proposed tariffs of up to 20pc on all foreign goods and 60pc tariffs on all imports from China, and plans the "Trump Reciprocal Trade Act," which promises a 100pc reciprocation of any tariffs placed on US products from other countries.
During his first term in office, Trump sparked a trade war with China that led to retaliatory tariffs against US grains — contributing to the first US agriculture trade deficit in 60 years. The USDA projects that for the current fiscal year the US' agriculture trade deficit will reach $42.2bn, the largest deficit on record.
While vice president and Democratic presidential candidate Kamala Harris has been less vocal about trade policies on the campaign trail than her opponent, she has continued to indicate a hard line toward Chinese goods.
Trump trade concerns
Trump's first presidency featured trade disputes with China that started in 2018 with a 25pc tariff on goods such as cars and aircraft parts. China retaliated with a 25pc tariff on US soybeans and corn. The US' decades-long agriculture trade surplus reversed the next year.
As a way to settle the dispute, the US and China signed a "Phase One" deal in January 2020 that required Beijing to step up purchases of US agricultural and energy products. But China never fully implemented that agreement, citing the economic disruption from the Covid-19 pandemic.
Chinese tariffs on US grains remain in place, but with an annually renewed waiver that restricts them. Currently, Chinese tariffs on US ag products are at a most favored nation rate of 3pc for soybeans and 1pc for corn within sales quotas and 65pc for out-of-quota, according to a study by the World Agricultural Economic and Environmental Services (WAEES). The study noted that the out-of-quota tariff rate has historically not been applied, even after corn imports exceed the quota of 7.2mn metric tons (t).
If China were to cancel the waiver that blocks the 25pc retaliatory tariff, US soybean exports to China could decline by 51.8pc from baseline levels, dropping by 14mn-16mn t annually, according to the WAEES. Corn would also fall, by 84.3pc or 2.2mn t annually. But if China matches Trump's proposed 60pc tariff, WAEES says US soybean export loss would total 25mn t.
Any further deterioration of US agricultural trade with China would likely benefit South American countries, such as Brazil, which can readily fill the gap.
Brazil's soybean production and total exports have been steadily rising, with the country reaching record soybean production of 161mn t and record soybean exports of 102mn t for the 2024-25 crop year, according to estimates from the US Department of Agriculture (USDA). The share of Brazilian soybeans exported to China increased during the Trump-era trade war by three percentage points from 80pc of exports in 2017 to 83pc in 2018, according to the Associação Nacional dos Exportadores de Cereais (ANEC).
A quieter approach
While Harris' message on trade may appear more measured, the current administration that she serves in has kept most of the Trump era Chinese tariffs in place. The section 301 tariffs imposed under Trump have not been repealed, and in May 2024 the US Trade Representative expanded tariffs further, albeit in a more targeted fashion on specific sectors of the Chinese economy, such as semi-conductors and electric vehicles.
Harris was one of 10 senators that voted against the passage of the US-Mexico-Canada (USMCA) trade agreement in 2020 on account of worker protection and environmental concerns. The USMCA will be up for review in 2026.
The Harris campaign told the AFBF in September that she will "not tolerate unfair trade practices from China or any competitor that undermines American farmers and ranchers."
Where Trump's rhetoric worries some in the market as being too harsh, others worry a possible Harris administration may not be tough enough on reversing the ag trade deficit. The limited focus on the issue on the campaign trail, combined with the continued tariffs and little new action makes participants nervous that the deficit may not be properly addressed.
