WASHINGTON, DC, US — The American Soybean Association president testified to the US House of Representatives about the impact on the industry if trade relations with China are not delicately maintained.
Josh Gackle, current ASA president and soybean farmer, was a board member more than five years ago when a trade war began between China and the United States with tit-for-tat tariffs.
“There is a geopolitical relationship that affects national security and includes issues such as data privacy, human rights and intellectual property; and there is the economic, commercial trading relationship,” Gackle said during testimony. “Our strong appeal is that careful consideration be given to maintain, rather than alienate, the economic relationship when discussions move forward in addressing geopolitical and other significant issues.”
Soybeans are the country’s top agriculture export. In 2022-23, the US soybean export value totaled approximately $32.6 billion. China accounted for more than $18.8 billion, with the next destination trailing at around $3.3 billion. China’s demand for soybeans accounts for more than 60% of global soy imports, with one in three rows of soybeans grown in the United States destined for China.
In 2018, soybeans were the focus when the United States imposed tariffs on Chinese imports. China responded with tariffs on US soybeans that essentially halted soy exports to the country overnight.
Gackle explained the industry experienced not only an instant loss in market share in its largest export market but also an immediate price drop of $2 per bushel. The USDA’s Economic Research Service issued a report showing a 76% reduction in the value of US exports to China from 2017 to 2018 and estimating the trade war cost US agriculture more than $27 billion. Soybeans accounted for 71% of those annualized losses.
The ASA and its farmer leaders had worked 40 years to develop the China market from the ground up; tariffs that reached up to 27.5% during the height of the trade war immediately strained those relationships, altered global soy trade by opening the door for competitor countries — namely Brazil — to claim market share, and placed a reliance on short-term aid. Shipments have since resumed through a tariff exclusion mechanism included in the China Phase One Agreement signed January 2020, but the waiver process that reset tariffs back to pre-trade war levels could be suspended by China any time.
“This environment (ambiguity of waiver procedure), anti-China rhetoric from Congress, the continued threat of tariffs from both the US and China, and the lack of a roadmap for long-term resolution of these challenges combine to increase uncertainty for US farmers and exporters,” he said. “There is substantial risk that more unanticipated tariff action will undermine investments, export prices, and farm income.”
The North Dakota soy farmer said in his testimony there is one point he cannot emphasize enough, “Even as the United States considers actions to protect our national security interests, we must also maintain and protect our economic and trade interests as well. Soybean growers need predictability and certainty that we will retain market access in China.”
The ASA made specific policy recommendations that Gackle shared with the committee, including the following, details of which can be read in his full testimony:
- Rejecting legislative attempts to repeal or modify China’s Permanent Normal Trade Relations (PNTR) status.
- Passing a comprehensive farm bill in 2024 that meets the needs of US agriculture.
- Exercising congressional oversight authority to press the administration to reengage in negotiations for bilateral and multilateral free trade agreements (FTA).
