While tariffs have dominated the headlines recently, ag economists say the trade deficit is not something to ignore.
“Yeah, we do have a trade deficit overall in the U.S. economy, and we also have a trade deficit in agricultural and food products. The deficit of agriculture and food products is a story of very different worlds. On the one hand, we have a big surplus in major commodities like wheat, corn, soybeans, cotton, pork, and many other products, but we have a deficit in things like fruits, vegetables, and many processed products. So, again, those have impacts on different parts of U.S. agriculture, and to try and address that deficit is a high priority of the current administration,” said Pat Westhoff, director of the Food and Agricultural Policy Research Institute at the University of Missouri.
Westhoff says while the tariff situation has calmed, they are still having a role in market action. He says there is no question that China will now look elsewhere for commodities like soybeans.
“With the current tariffs that are put in place by China, over 125 percent, that makes it almost impossible for the U.S. to sell soybeans to China. That market will be dominated even more than it already is by Brazil and a couple of other major players outside of the US. So, then the question becomes whether we were able to pick up enough markets elsewhere in the world to offset the loss of the Chinese market. A lot of people are hoping that the current very high levels of tariffs will not persist, that there be some sort of agreement that will at least bring those tariff levels down if not eliminate them entirely.”
Progress could be on the horizon. Bloomberg reports Chinese officials will come to the table if certain demands are met. So far, more than 100 countries have indicated they are willing to negotiate.
Shaun Haney joined RFD News to discuss the potential impact of the Trump-Xi summit uncertainty, ongoing agricultural trade talks, and why geopolitical developments could carry important implications for farmers and global commodity markets.
