US agricultural groups presented contrasting but complementary positions at a recent trade hearing, urging American trade authorities to avoid fresh tariffs that could harm farm exports while simultaneously supporting firm action against China for failing to meet key trade commitments. The discussions took place during a public hearing convened to review China’s implementation of the US-China Phase One Agreement signed five years ago.
Representatives from the soybean sector cautioned that imposing new tariffs could repeat the damaging consequences of the earlier trade war, which sharply reduced soybean exports to China and inflicted heavy financial losses on US agriculture. Soybeans are the largest US agricultural export to China, which remains the single biggest overseas market for the crop and accounts for more than half of all US soybean exports.
Data presented at the hearing showed that US soybean exports to China fell steeply after tariffs were imposed in 2018. Exports declined from a record 36.1 million tonnes in 2016-17 to 28.2 million tonnes in 2017-18, before plunging to 13.4 million tonnes in 2018-19 and recovering only partially to 16.1 million tonnes in 2019-20. According to official estimates, soybeans accounted for 71% of more than $27 billion in annualised agricultural losses linked to the trade war.
A report by World Grain says, China’s importance to the soybean market was underlined by figures showing that the country purchased nearly 25 million tonnes of soybeans from global suppliers in 2023-24 and has accounted for an average of 61% of global soybean stocks over the past five years. US producers, however, lost significant market share following the introduction of Section 301 tariffs, a loss that has not been fully recovered.
Under the Phase One Agreement, China committed to purchasing an additional $200 billion worth of US goods and services over two years, including sharply higher agricultural imports. For agriculture, China agreed to buy $12.5 billion more in 2020 than in 2017, rising to $19.5 billion more in 2021. While longer-term projections extended through 2025, product-specific targets were never defined.
During the two years covered by the purchase commitments, China imported about 62 million tonnes of US agricultural products, or roughly 77% of the agreed level. Although the targets were not fully met, the agreement allowed purchases to be based on market prices and commercial considerations, giving China flexibility in timing and sourcing. Agricultural groups argued that this ambiguity weakened enforcement and should be avoided in any future agreements.
At the same time, representatives from the renewable fuels sector supported the ongoing Section 301 investigation, pointing to China’s near-total withdrawal from importing US ethanol and distillers’ grains. Once among the top buyers of both products, China has reduced imports to almost zero amid escalating trade tensions and restrictive policies.
China had been the third-largest destination for US ethanol exports in 2016, accounting for 17% of total shipments. However, policy shifts after 2016 saw China move from encouraging imports to imposing tariffs and other restrictions to protect its domestic biofuels industry. Over the past four years, additional barriers have effectively shut US ethanol out of the Chinese market.
While ethanol and distillers’ grains exports to China have collapsed, overall US ethanol exports have reached record levels, touching 1.9 billion gallons in 2024. Distillers’ grains exports have also remained steady at around 11 million tonnes annually, with Mexico, South Korea and the European Union emerging as major buyers.
Farm and industry groups warned that new tariffs or penalties could trigger retaliation and deepen uncertainty for producers already facing tight margins. At the same time, they called for stronger enforcement of existing commitments and a more precise, enforceable framework in any future Phase Two agreement to ensure predictable and sustained access to overseas markets, particularly China.