In a significant move to thaw relations with the United States, China has announced the restoration of soybean import licenses for three American companies. This decision marks a pivotal step in the ongoing trade dialogue between the two nations, which has been strained by tariffs and retaliatory measures.
The reinstatement of these licenses comes after months of intense trade hostility. These tensions started in March 2018, when the U.S. first announced a Section 232 investigation into imported lumber, prompting retaliation from Beijing by halting the import of U.S. logs. China didn’t just ban us the logs, but hit America with tariffs on many of our ag products, soybeans included. This decision has hurt U.S. farmers and exporters immensely.
A semi truck load of soybeans being unloaded into an elevator hopper in Ohio in 2021. This incident served to remind many exactly what American producers are dealing with thanks to continually exacerbated trade disruptions. Recent events are pointing to an opportunity to dial back some of that overreach. Further, China had already reinstated some import licenses for U.S. soybeans. Moreover, Russia has removed tariffs on select U.S. agricultural products, which were enacted in mid-2023.
Additionally, China has made some relatively small purchases of American agriculture products, such as two cargoes of U.S. wheat. These purchases are just the latest evidence from many of an overwhelming desire to reconnect with U.S. suppliers. A 10% tariff on all U.S. imports, including agricultural products, remains. This newly announced, maintain-at-all-costs tariff greatly lessens hopes for a deeper rebound in trade flows between the two countries.
American farmers have suffered enormous damages as a result of the trade war. Additionally, the recent reinstatement of soybean import licenses will contribute to their recovery. Soybeans are an immensely consequential agricultural good for the United States, with China previously being one of its biggest importers. The timing of the renewed license dovetails with China’s ongoing need for soybeans to fill gaps in its domestic supply caused by erratic demand.