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US agricultural exports under the US-China trade dispute

2018/6/11 15:06:14

At the beginning of April, the USA under president Donald Trump published a proposed list of 1,300 Chinese goods subject to additional 25% tariffs, involving industries such as aerospace, information and communication technology, robotics, pharmaceutical and machinery. China issued a tariff countermeasure against the USA and announced a new tariff list, imposing an additional 25% tariffs on 14 categories of 106 US products, including agricultural commodities such as corn, soybean, and sorghum.

Since China is one of the biggest importers of agricultural products from the USA, the trade dispute has a significant impact on US farmers and the Chinese agricultural industry. Tranalysis gives an overview of the impact on corn, soybean, and sorghum.


Impact on corn

It's estimated that additional tariff of 25% on American corn that is not for seed production will have a relatively large impact on China's corn imports. It is very likely that China will moderately increase import volume of corn from other countries such as Brazil and Argentina.


The Sino-US trade war will further widen price gap of corn of different grades in China. In the short term, additional tariff strongly supports price rise of domestic high-quality corn. The current price of domestic first-rate corn is higher than the CIF price of corn imported from the US. But with the additional tariff of 25%, the latter will exceed the former.


It is worth noting that China is highly dependent on soybean imported from the US. With the start of Sino-US trade war, related national departments held special sessions to study adjusting the planting structure and expanding the soybean planting area, clearly proposing to expand soybean planting area.


Impact on soybean

China is the largest buyer of US soybean. Soybean plays an important role in the Sino-US trade and the development of domestic feed and breeding industries. The US, Brazil, Argentina and China are the world's largest countries by soybean output with the total soybean output accounting for about 86% of the world's total. Of which, the US ranks first, taking up 34% of the world's total.


As for soybean export volume, Brazil ranks first, accounting for 45% of the world's total, and the US ranks second, accounting for 36%, followed by Argentina. Together the three countries account for 89% of the total. It is worth noting that soybean is the largest agricultural products of the US by export volume.


Currently, China is the world's largest country by soybean consumption and import volume. Although China had adopted measures to expand soybean planting area several times in the last couple of years, China's soybean is highly dependent on the overseas market. In the soybean market, China and the US are each other's most important trading partners.


China's soybean is highly dependent on the overseas market. In 2017, China's import volume of soybean hit a record high of 95.53 million tonnes, up by 13.9% year on year.


Apart from expansion of domestic soybean planting area, China needs to import soybean from other regions except for the USA. In fact, in order to avoid the risk from the US, China has already had a clear picture. Since 2012, Brazil had replaced the USA as China's largest soybean supplier.


Impact on sorghum

At present, China is highly dependent on imported sorghum and imports most of the sorghum from the US, sorghum ranks second by trade value among agricultural products in the Sino-US trade. Additional tariff on sorghum will push up domestic sorghum price, which could raise the cost of raw materials for the downstream industries of sorghum such as feed and brewing.


China imports more than 5 million tonnes of sorghum annually. The import volume and import value of sorghum from the USA hit 4.76 million tonnes and USD957 million, taking up 94% and 93% of the total respectively. The additional tariff will raise import cost of sorghum, leading to the decline of its import volume and boost demand for corn as a substitute from domestic feed industry.


On February 4, 2018, the Ministry of Commerce of China decided to carry out the anti-dumping and anti-subsidy investigation on sorghum originating from the USA. On May 18, 2018, the Ministry revealed to terminate the anti-dumping and anti-subsidy investigation on sorghum originating from the USA. Besides, investigation department found that many pig farmers faced difficulties, as domestic pork price has been declining continuously.


China may not adopt the additional tariff of 25% on sorghum, in the end, considering the result of the investigation and public benefits. This means that China still needs to import large amounts of sorghum from the USA.


About the article

Tranalysis is one of the leading trade intelligence provider in China, offering import and export information for thousands of commodities.


Get the detailed trade analysis of your commodity by visiting our website and get in contact with our team by or +86-020-37616606.


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