Tag: Trade

U.S. ag exports are reaching new highs and simultaneously getting the side-eye as Ag Secretary Tom Vilsack contemplates the contentious relationship with China.

In totality, ag exports are projected to be up 21% to $164B in 2021, soaring above the USDA’s initial February forecast. Dairy, poultry, and livestock products lead the way in expected increases.

Some growth can also be credited to China and its record-breaking expected $35B in purchases. Nearly a fifth of U.S. ag exports are headed to China, and over-reliance on a singular country is on Secretary Vilsack’s mind.

A soundbite: “Obviously, we’re much better off without a trade war than we were in a trade war with China in terms of agriculture. But that’s a complicated relationship, and anything can disrupt it at any point in time. Which is why I think it is going to be important, at the appropriate time, for the administration to take a look at where there are new partnerships, new arrangements, new connections,” Vilsack said.

Easier said than done: Without Europe seeing eye-to-eye with the U.S. on sensitive production practices (read: GMO, growth stimulants, etc.), new trade arrangements are unlikely. Other opportunities may exist in Southeast Asia and Africa, as well as with the Trans-Pacific Partnership successor.

Where this goes: Vilsack notes he’s confident about the future of the relationship with China so long as it’s centered on trade. But the relationship is too complex to say if today’s trend will hold firm.

A trade squabble between the U.S. and the EU years in the making is finally coming to a close — and U.S. agriculture is stoked.

Refresher: The quarrel began nearly 17 years ago over a disagreement regarding subsidies given to aircraft manufacturers Boeing (U.S.) and Airbus (France).

More recently, in 2019, the World Trade Organization (WTO) told the U.S. that it could slap the EU with tariffs because of its Airbus subsidies. And the U.S. did just that — on a variety of unrelated products, including French wine and German cookies.

Not to be outdone, back in November the EU said, “Well, we’ll show you…” and it hit the U.S. with retaliatory tariffs. And because those tariffs focused on commodities, fruit, tractors, and other products, U.S. ag took a big hit.

Calling a truce: The two trade giants agreed to a temporary tariff suspension back in March. But this week, they officially buried the hatchet.

Soundbite: The truce “will certainly be good news for American agriculture. We will continue to … look for opportunities to expand more new and better markets,” said Ag Secretary Tom Vilsack.

Those earlier 15-25% tariffs had hit U.S. producers hard. Wheat exporters, in particular, were basically sucker-punched. Being a high-volume, low-margin crop, wheat sales to the EU were pretty much red-lighted by the 25% tariff. But now that everyone is playing nice again, hard red spring wheat is on its way, skipping back across the pond.

Where this goes: With the ag tap of food products/machinery once again flowing freely, companies such as John Deere, Caterpillar, Hershey, and Ocean Spray are poised to reap the benefits.