China to drop tariffs on US agricultural imports

The US recently asked China to eliminate all tariffs on US agricultural exports as part of a deal to end their international trade dispute. Hanse data show that China has been a fast growing destination for US agricultural products. However, US agricultural exports are relatively small and China has remained a relatively small destination.

China represented in 2017 6.4 percent (US$4.3 billion) of total US agricultural exports (HS 2002 AG2 chapters 01-10) up from 3.4 percent in 2007 albeit down from a peak of 8.5 percent (US$5.9 billion) in 2013. Agricultural products made up 4.4 percent (US$67.7 billion) of total US exports in 2017 and 3.3 percent of US exports to China. The two big agricultural exports chapters are HS 02 meat and 10 cereals. In cereals, US exports to China increased from 0 percent in 2007 to 7.2 percent in 2017 albeit down from 11.7 percent in 2013. China represented in 2017 23.4 percent of total US exports in 03 fish and crustaceans and 22.9 percent in 05 animal originated products (Figure 1).

Figure 1. US agricultural exports to China
 

The big destinations for its US agricultural products are Canada (15.6 percent), Mexico (14.4 percent), and Japan (13.3 percent). The US has significantly increased the share of emerging markets including China in its agricultural exports from 37.2 percent in 2002 to 45.4 percent in 2017. Latin America and the Caribbean has remained the US’ biggest regional export destination representing 24.7 percent of all agricultural exports in 2017 up from 22.2 percent in 2007. However, emerging and developing Asia including China had been growing the fastest from 8.2 percent in 2007 to 13.1 percent in 2017.

The impact of US agricultural exports to China is limited. China may not find it too difficult to make concessions on a relatively small portion of US trade. Yet, agricultural exports remain among the most controversial ones and a win for the US could carry some important symbolic value possibly aiding a liberalisation of agricultural trade more generally.

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