The U.S. agricultural trade deficit is projected to grow to $42.5 billion in the fiscal year that starts Oct. 1, while sales to China continue to slump, providing fresh fuel to ongoing election-season debates about the future of trade policy.
U.S. ag exports are estimated to total $169.5 billion in FY25, a drop of $4 billion from FY24, reflecting in part the continued drop in prices for corn, soybeans and other key commodities, according to USDA's quarterly ag trade outlook, released Tuesday.
USDA is forecasting that U.S. ag imports will increase by $8 billion in fiscal 2025 to $212 billion, pushing the projected trade deficit to $42.5 billion, up from a $30.5 billion deficit projected for FY24. The surge in imports reflects consumer appetites for fresh fruits and vegetables as well as coffee, cocoa and other products.
The report a underscores the weakness of the Chinese market for U.S. farmers. Exports to China are projected to drop $3 billion to $24 billion. In 2023, U.S. ag exports to China exceeded $33.6 billion.
“Deceleration in economic growth and weak consumer sentiments reduce China’s overall import demand, particularly for feed stuff,” the USDA report says.
“Soybeans account for the bulk of the year-over-year reduction as U.S. supplies face stiff competition from Brazil. U.S. coarse grain exports are also expected to decline due to lower U.S. sorghum production and China’s sufficient corn supplies (owing to expected imports from Brazil and Ukraine and large domestic production).”
China also is falling behind Mexico and Canada as an export market for U.S. ag goods. Mexico is expected to import $29.2 billion worth of U.S. farm products, down from $29.3 billion this year. Exports to Canada are projected to remain flat in FY25 at $28.9 billion.
Soybean farmers are used to volatility in Chinese demand. Sales slumped starting in 2018 when then-President Donald Trump slapped tariffs on China and an outbreak of African swine fever devastated Chinese hog production.
“The calculus has changed a little bit when China came back into the market in 2020, and started buying a lot of U.S. beans. … Since then, we've seen those exports to China come down, as China has increasingly relied on South America, particularly Brazil, for soy as well as for animal proteins,” said Mac Marshall, principal of Balcony View Consulting, speaking to Agri-Pulse ahead of the USDA report’s release.
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Stephen Nicholson, global strategist for grains and oilseeds at Rabobank, said, "China's just not taking U.S. soybeans like they used to, and so we need to repair that relationship to be able to get that market back, or get some more share of that market than we have right now."
Trump is threatening to raise tariffs on China even higher if he wins a second term and impose across-the-board tariffs on imports from other countries. Vice President Kamala Harris argues that the tariffs would effectively raise taxes on U.S. consumers, while economists say targeted countries could retaliate against U.S. exports.
Meanwhile, Republicans have been pressuring the Biden administration on the overall ag trade deficit, arguing that too little is being done to open up new markets for U.S. exports. The Biden administration has declined to try to negotiate new tariff-lowering trade agreements, although it's not clear Congress could pass the fast-track negotiating authority a president would need to finalize a new free-trade deal.
In a statement Wednesday, the top Republican on the Senate Ag Committee, John Boozman of Arkansas, said, “We have entered uncharted territory with the latest projected data on the U.S. agricultural trade deficit. The Biden-Harris administration is failing our farmers, ranchers and foresters when it comes to maintaining our competitive advantage in the global marketplace."
The United States last had an ag trade surplus in 2022, and even then it was only $2 billion. The U.S. ran small deficits of $1.3 billion and $3.7 billion in 2019 and 2020, respectively.
The U.S. is expected to slightly increase the volume of corn and soybeans shipped to Canada, Mexico and other overseas markets in FY25, but the value of those exports is projected to fall on lower prices.
U.S. corn exports are estimated to increase from 57 million to 58 million metric tons in FY25, but the value of those exports is projected to drop from $13.1 billion in FY24 to $12.2 billion.
The U.S. is expected to ship 50.4 million metric tons of soybeans, worth $22.9 billion, in FY25, compared to 46.3 million tons, worth $24.4 billion, in the current fiscal year.
Wheat exports are expected to rise from 20.6 million metric tons in FY24 to 22.2 million tons in FY25, with the value of those shipments also increasing slightly, $5.9 billion to $6 billion.
An estimated decline in the volume of beef also is expected to contribute to the deficit. USDA projects sales of U.S. beef to decline from 1 million metric tons worth $9.4 billion in FY24 to 900,000 tons valued at $8.4 billion in FY25.
Overall livestock, poultry and dairy exports are forecast to fall $100 million to $38.6 billion, with increases in pork, poultry and dairy products compensating for much of the drop in the value of beef exports.
Specialty crops are one of the bright spots for agriculture. Exports of tree nuts are projected to grow from $9.5 billion to $9.9 billion in FY25. Exports of processed fruits and vegetables are seen growing $300 million to $8.3 billion.
Sales of fresh fruits and vegetables "are forecast $100 million higher to $7.6 billion due, in part, to rising apple shipments to India following last year’s lifting of retaliatory tariffs that had been in place since 2019," USDA says.
The agricultural import increase in FY25 reflects increases in a range of products, including fresh fruits and vegetables, sugar, cocoa and coffee.
Imports of fresh fruits are estimated to rise $800 million to $20.3 billion, while imports of fresh vegetables are estimated at $13.5 billion in FY25, ,a $700 million increase over the current fiscal year.
Americans are expected to consume $9.3 billion worth of coffee and $6.8 billion in cocoa and related products in FY25, gains of $700 million and $400 million respectively. Imports of sweeteners are projected to rise form $7.5 billion to $7.8 billion.
Wine imports are forecast up $100 million to $7.1 billion.
Lydia Johnson contributed to this report.
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