Just over a year ago, the U.S.-China “Phase One” agreement was signed, leading to the waiver of China’s retaliatory tariffs against U.S. agricultural products.
This, opened the door again of largest wheat consumer in the world after nearly two years in which U.S. wheat producers were all but shut out.
The Phase One agreement contained both specific purchase targets for agricultural commodities, and structural changes to China’s import systems.
Consequentially, China is projected to import 9 million metric tons (MMT) of wheat this marketing year — a 25-year high, and almost double their previously highest TRQ purchases.
China turned to U.S. wheat producers for a significant portion of that higher import volume.
Since the signing of the Phase One agreement, U.S. wheat sales to China have totaled more than 2.8 MMT — nearly 90% above USW’s long-term pre-trade war average.
Those imports have come from four different classes of U.S. wheat and helped meet the demand for U.S. wheat from China’s private flour millers.
This import volume is likely to make China the fourth largest export market for U.S. producers in marketing year 2020/21, which ends May 31.
With this new U.S. administration, many in agriculture are watching closely to see which way the political winds will blow those discussions with China.
While there may be a desire by some for a “fresh start” in the China relationship, the Biden administration would do well, for U.S. agriculture, to continue to build on the tremendous export potential for China.
President-elect Biden’s early statements and plans to keep tariffs in place on Chinese goods until they can be reviewed are an important first step in this direction.
