China claims resilience to tariffs on U.S. farm products

Chinese news media say the country is confident it can cope with reduced supplies of U.S. farm goods as China raises tariffs on U.S. agricultural products. China's trade war tariffs on U.S. products are approaching 100% after China announced an 84% tariff on U.S. goods today to counter President Trump's announcement of 125% tariffs on Chinese goods. 

China's "party line" is that U.S. farmers will be hurt more than China by the tariff war because China has diversified its import sources, increased domestic production, and reduced use of soybean meal in animal feed. Weak consumer demand in China and deflationary pressures also reduce China's vulnerability to tariffs on farm product imports...at the same time these factors pose the gravest threat to China's economy sliding over the edge if its exporters of consumer and industrial products lose U.S. markets in the trade war.

An April 9 article, "China strengthened self-sufficiency in agricultural products, reduced reliance on America," said that China's 34-percent tariffs were "aimed at cutting off Midwestern farm states' exports from more than 1 billion Chinese consumers." The article claimed that American farmers would be the losers from escalating tariffs because China has "increased its agricultural self-sufficiency" since the first round of the trade war in 2018. 

An April 5 analysis by Chinese news outlet Caijing reported that China's imports of agricultural goods from the U.S. last year were valued at $27.5 billion, about 12.8% of China's agricultural imports. However, only a few products rely heavily on imports for their supply. Caijing singled out soybeans and sorghum as the commodities most reliant on imports from the United States. 

China had already reduced its agricultural imports from the United States last year. Caijing reported that imports of U.S. soybeans were down 16.3% last year, imports of beef were down 3.4%, pork imports were down 14.7%; and chicken imports were down 50%. Caijing said China had shifted its focus to importing from South America; it estimated that China's imports from Brazil alone represented the equivalent of 44.9 million hectares of land.

Caijing also reported that the United States was the top export market for China's agricultural exports, with 22-percent growth last year. Caijing attributed the growth to improved competitiveness of its seafood, vegetable and fruit exports. 

Chinese articles stress the country's success in "diversifying" its import sources. In the case of soybeans that has meant soaring reliance on Brazil. In 2024 China sourced 71 percent of its imports from Brazil, but China still imported $12 billion worth of soybeans from the United States.

The April 9 article reveals that China has been stockpiling soybeans since President Trump's electoral victory. According to the article, China imported more than 16 million metric tons between November and February, nearly 50-percent more than the previous year. The article said that the low moisture content of U.S. soybeans makes them suitable for stockpiling. The article said the short-term impact on China's soybean market will be limited since Brazilian beans are soon to hit the market. The authors speculate that soybean import costs could eventually rise 5%-to-10%, but sales of reserves later in the year and expanded supplies from Brazil could avert a price increase. 

The article notes that U.S. corn and wheat exports to China have been significantly reduced. The article notes that corn and wheat prices in China are at a 5-year low, providing a "buffer against imports." The article's authors point out that a boost in Chinese prices from reduced imports would help revive Chinese farmers' profit margins, currently suffering from low prices.

National Bureau of Statistics, Raw materials prices paid by Chinese enterprises.

China's stumbling economy and struggling consumers are one of the chief factors reducing China's vulnerability to reduced food imports. An early March article in the communist party's Xin Jing Bao noted that weak demand due to the poor state of China's economy has reduced demand for livestock products. Weak demand has, in turn, driven down prices of milk and beef and reduced feed use of corn, wheat and sorghum. Pork prices are fluctuating at a relatively low level, and pork imports have been on a 5-year slide.

China's cotton market tends to be correlated with the state of China's macroeconomy. Moreover, there is a long-term trend of shifting from cotton to manmade fibers in textiles. Consequently, China's cotton prices are also in the doldrums and demand for cotton imports is tepid. 

Chinese articles cite declining use of soybean meal in animal feed following orders issued by China's State Council in a 2020 document to find substitutes and to adopt low-protein diets that utilize amino acids. This claim is probably exaggerated. Supplies of substitutes can only make a small dent in China's annual consumption of about 70 million tons of soybean meal. China has assessed 100-percent tariffs on one substitute--canola from Canada. Only one Chinese livestock company has shown any credible progress on adopting low-protein diets for pigs. 

China is vulnerable to loss of two less prominent feed ingredients imported from the United States: whey and alfalfa. Both of these products were quietly excluded from the list of tariff increases issued in early March, indicating their importance to China's livestock economy. 

Whey, a by-product of cheese production, is used in various kinds of animal feed in China. China's imports appear to correlate with fluctuations in the country's hog market. Whey products constitute most of the value of U.S. dairy exports to China. An April 7 update on the whey market posted on China Feed Information Net observed that tariff announcements had sent traders scrambling and led to substantial whey price increases since the United States is the main supplier of imported whey. 

Source: Data from USDA GATS database.

A dairy industry expert told Xin Jing Bao last month that China has high demand for imported alfalfa as feed for dairy cattle and 85 percent of imports came from the U.S. in 2024. Alfalfa was a concern before the 2018 trade war when 36 percent of China's alfalfa supply was imported. Last month the dairy expert told Xin Jing Bao there would be limited impact since alfalfa was not included in the early March tariff increases. However, the more recent across-the-board tariffs presumably will apply to alfalfa and whey. 

Source: Data from USDA GATS database.