In 2018, China responded to President Donald Trump’s tariffs on $250 billion of United States imports by retaliating against $110 billion of U.S. exports. Almost all U.S. farm exports to China became subject to retaliation last year.
How have U.S. agricultural exports fared in the interim? At the Northwest Seaport Alliance (NWSA), encompassing the ports of Seattle and Tacoma, overall exports to China were down 32% in 2018 compared to 2017, and are down 21% in 2019, as of the end of March. These numbers are being driven by impacts on specific commodities, such as: soy exports—69% lower in 2018 than in 2017 (see sidebar on page 6); seafood exports—down 36%; dairy exports—down 41%; apple exports—down 26%; and exports of fresh cherries—down 33.4%.
NWSA handled agricultural exports of just under $5 billion in 2017. In 2018, it was just shy of $3.5 billion. Agricultural exports dropped from 224,000 TEU in 2017 to 169,000 TEU in 2018.
Agricultural exports at NWSA had been growing for five years “until they took a wrong turn” last year, noted Tong Zhu, NWSA’s chief commercial officer. Allowing that a strong dollar contributed to suppressed export levels, she added: “I can’t be convinced that was driven mainly by currency rates.”
At the port of Oakland, another major agricultural exporting gateway, outbound cargo was also down in 2018, although it saw surprising upticks in March and April of this year. Could it be that Chinese importers were loading up on commodities in advance of a tariff hike much as U.S. importers did late last year?
Mike Zampa, the port spokesperson couldn’t say, but it is clear that the anomalous upticks did little to assuage concern over agricultural export volumes at a port where over 40% of all exports originate on America’s farms. “The broad assumption is that retaliatory tariffs will have a negative impact on the agricultural sector,” said Zampa. “We have been worried about this since the trade dispute arose and we really hope this thing gets resolved.”
The lag in ag has also had its impact on operations at ports which enjoy an unusual relative balance between imports and exports. “We have been shipping a lot of empties back to Asia,” said Zampa, noting that this has also been due to the surge of imports Oakland has seen over the last six months.
Zhu has heard anecdotally “about a lot more empties coming through our gateway to return to Asia.” “A rail partner told us they’ve been seeing ‘a flood of empties,’” she said.
The U.S. agricultural sector is particularly vulnerable to disruptions in international trading patterns, because, as Peter Friedmann, executive director of the Agriculture Transportation Coalition, explained, “nothing we produce in agriculture or in forest products can’t be sourced somewhere else in the world.” “And if we don’t deliver affordably and dependably,” he added, “our foreign customer will go elsewhere to buy.”
Continued: Ag Biz Redux
