It’s long been a point of pride in American agriculture that the United States exported more than it imported in farm commodities, but that surplus has vanished and may not be coming back anytime soon.
Congressional Republicans are using the ag trade deficit, projected by USDA estimates to reach a record $30.5 billion for fiscal 2024, to attack the Biden administration’s trade policies, arguing President Joe Biden should be knocking down more trade barriers and negotiating new tariff-lowering trade deals.
“This decline is unsustainable, and we urge the Biden administration to immediately take action to improve the competitiveness of U.S. agricultural products abroad and reverse this trend,” 22 Republican senators led by Minority Whip John Thune, R-S.D., said in a March 13 letter to U.S. Trade Representative Katherine Tai and Agriculture Secretary Tom Vilsack
The letter demanded Tai and Vilsack detail what “specific actions” the Biden administration plans to take this year to boost U.S. agricultural exports, and say whether the president plans to pursue “new or improved free trade agreements with any countries to obtain new market access for agricultural products in 2024.”
U.S. Trade Representative Katherine Tai (right) speaks as Ag Secretary Tom Vilsack (left) listens.Economists point to many reasons for the trade deficit and that closing it won’t be easy. The U.S. also ran small deficits during the last two years of the Trump administration at $1.3 billion in fiscal 2019 and $3.7 billion in FY20 before having small surpluses in FY21 and FY22, which subsequently turned into a deficit of $16.7 billion in FY23.
Commodity prices have dropped sharply from their peak in 2022, reducing the value of U.S. exports and contributing to the trade deficit, economists say. It’s true not just with corn, soybeans and wheat; almond growers, who rely heavily on exports, also have seen the price of that crop drop for several years.
U.S. corn exports are projected at 54 million metric tons, 14% below the 62 million tons shipped in FY22, and the value of corn exports this year is projected to fall to $13 billion, a drop of 33% from $19.5 billion in FY22.
Similarly, the value of U.S. almond exports fell from $4.8 billion for the 2021-2022 marketing year to $4.1 billion for the 2022-2023 marketing year. The volume of U.S. almonds shipped overseas fell by a smaller percentage from 2.2 billion to 2.1 billion pounds.
Among other factors at play in the growing ag trade deficit, the U.S. has reduced exports of soybeans because of the boom in domestic renewable diesel production — soybean exports are projected at 46.8 million metric tons for FY24, down 20% from FY22 — and U.S. corn exports face increased competition from Brazil.
China relaxed its import requirements for Brazilian corn in 2022, and Brazil accounted for 85% of China’s imports between September and December, according to a recent University of Illinois analysis. Altogether, Brazil exported 2.2 billion bushels of corn in the 2023 calendar year, eclipsing the U.S. total of less than 1.8 billion bushels.
The strong value of the dollar, meanwhile, has made imported products relatively cheaper than they were, and U.S. consumers are showing an increased appetite for fruits, vegetables, wine and other products produced overseas.
The United States is expected to import $201 billion in farm commodities this year, up from $195.4 billion in FY23. As recently as 2020, U.S. ag imports totaled just $143.4 billion before rising to $163 billion in 2021 and jumping to $194.2 billion in 2022, according to USDA data.
Imports of horticultural products, a category that includes fruits, vegetables and nuts as well as alcoholic beverages and cut flowers, are projected to reach $98.1 billion in fiscal 2024, up from $86 billion in FY21. Imports of fresh fruits are forecast to hit $18.9 billion for fiscal 2024, up from $15.5 billion in FY21.
Imports of sugar and other tropical products, including cocoa and coffee, are projected at $28.8 billion in FY24, compared to $23.9 billion in FY21.
“There's this pervasive thinking that the U.S. must be an agricultural exporter in general, and that just sort of isn't true anymore,” said Dan Sumner, an agricultural economist at the University of California, Davis.
A big reason for that, according to Sumner, is the changing U.S. diet. Americans eat more fruits and vegetables than they used to, and much of that must be grown elsewhere to ensure affordable fresh produce is available year-round.
“It’s not that we produce a lot less horticultural products than we used to. It is a bigger part of the diet, and that’s good. And we import a lot of it,” Sumner said.
Joe Glauber, a former chief economist at USDA who is now with the International Food Policy Research Institute, notes that U.S. consumption of blueberries has increased dramatically in recent years, with about 60% of the fruit now coming from foreign producers during months when the U.S. can’t produce the crop. Consumption, meanwhile, has more than doubled from 2010 to 2020 and continues to grow.
U.S. commodity prices can also drive an increase in imports. Beef imports are rising amid a shrinking U.S. cattle herd. USDA in February increased its forecast for FY24 beef imports by $1.2 billion to $10.1 billion on expectations that soaring U.S. beef prices will spur more imports from Australia and South America.
Glauber agrees with critics of U.S. trade policy who want new bilateral or multilateral trade agreements to open up markets for U.S. products.
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“We have essentially stood still for the past eight years,” Glauber said. The Obama administration negotiated the 12-nation Trans-Pacific Partnership, and while parts of it were incorporated into the new U.S.-Mexico-Canada trade agreement, the Trump administration withdrew from TPP, and the Biden administration hasn’t pursued reentering it or tried to negotiate other tariff-lowering deals.
But the outcome of the 2024 presidential election may not change the direction of U.S. trade policy much. Former President Donald Trump has called for an across-the-board tariff on imports, a move that could trigger retaliation against U.S. exports, and he reportedly remains close to former USTR Bob Lighthizer, who has long argued that trade agreements can do more harm than good to U.S. workers. The Trump campaign has referred reporters to Lighthizer on questions about Trump's trade policy.
Tai has defended the use of tariffs to protect U.S. industries and said during a recent Council on Foreign Relations event that she didn’t see it as a particularly partisan issue. The administration has kept many of Trump’s previous tariffs in place “because we see strategic value in those tariffs in this exercise of building out the middle class and reinvigorating American manufacturing, and the American economy,” she said, a comment that echoed Lighthizer’s philosophy.
Sen. Roger Marshall, R-Kan. (AP Photo/Alex Brandon)Kansas GOP Sen. Roger Marshall, who signed the letter to Tai and Vilsack, insists Trump is more likely than Biden to negotiate new trade deals. Marshall called the USMCA, signed during the Trump administration, “a great blueprint for future trade agreements.”
“We need a strong president that’s going to negotiate strong trade agreements. If it takes tariffs, so be it. I hope we can do it without tariffs, but I think Trump proved that he can negotiate strong trade agreements,” Marshall said.
Vilsack has been pushing back recently against the administration’s GOP critics.
He argues that the Biden administration has made progress in reducing some trade barriers, including by increasing Japan’s beef quota, but he notes that Congress has done nothing to renew the president’s fast-track negotiating authority, known as trade promotion authority. TPA, which ensures that a trade agreement submitted to Congress for ratification can’t be amended by lawmakers, is considered critical to negotiating new trade deals
Vilsack doesn’t think Congress is going to renew TPA until Americans are convinced they will benefit from new trade agreements.
“Because over time, we haven't done the job of selling trade as a benefit to consumers … as a benefit to keeping costs down [and] as a job creator,” Vilsack said Monday during the annual Agri-Pulse Ag and Food Policy Summit. “People see it as a job killer. And so, if you're going to get trade promotion authority, if you're going to get free trade agreements through the process, you have to rebuild people's trust in trade.”
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