Specifically, China has reinstated soybean import licenses for three American companies. This decision marks a long-overdue but welcome cautious approach to rebuilding the U.S.-China trade relationship. This decision comes against a backdrop of ongoing tensions and economic coercion that has defined the bilateral trade environment.
While this is a welcomed step in a positive direction, sadly, the 10% tariff on all U.S. imports—even agricultural products—still stands strong. Further, it casts a pall over expectations for a more robust rebound in trade flows between the two countries. Now, businesses are unable to weigh the—let alone navigate the complexity of—these import costs. When the U.S. first imposed tariffs, it took a lot of China’s retaliatory fire. As a retort, China announced an indefinite ban on U.S. log imports.
Most recently, China announced they were lifting tariffs on certain U.S. agricultural products. This decision removes some of the non-tariff trade barriers that were first put in place last March. Getting on board with this remarkable paradigm shift has allowed China to begin purchasing American agricultural products in earnest. Two recent reports attest to the purchase of at least two cargoes of U.S. wheat.
Restoring licensing for soybeans is a major step in the right direction to restoring trade relations. This progress is undercut by the continuing tariff ceiling that still looms over most imports. In March 2023, President Donald Trump directed U.S. Commerce Secretary Gina Raimondo to conduct an investigation that could lead to curbs on imported lumber. In response, retaliatory tariffs led China to stop buying U.S. logs altogether.
The restoration of soybean licenses reflects an acknowledgment from China of the importance of U.S. agricultural products in its market. The remaining tariffs continue to challenge the realization of a complete recovery in trade relations.