Can the U.S. thrive without China? Ag economists weigh in on the good, the bad and the uncertain.

Graph by Lindsey Pound, Ag Economists’ Monthly Monitor

As the ongoing tariff rivalry continues between the U.S. and China, a question nags in the background: Can the U.S. economy, including American agribusiness, decrease its dependency on China? Tyne Morgan of Farm Journal reports, "While the risks of losing more market share into China are a concern, the upside potential of a trade deal with China could be monumental."

Ag Economists’ Monthly Monitor asked economists if the U.S. could "reduce its reliance on China -- to which 83% responded -- 'Yes, it can,'" Morgan writes. The Monitor also asked if "U.S. agriculture could function without imports from China," to which "76% responded, 'yes, the U.S. can function without imports from China.'"

The steep agricultural tariffs are tough on both countries, and there are signs that "China is already hurting from the trade war and 'quietly' exempting nearly 25% of all U.S. imports from tariffs. . . . 72% of economists believe U.S. agriculture is in the middle of a recession," Morgan writes. "Sixty-one percent of ag economists think China and the U.S. will reach an agreement to revisit the Phase One trade agreement."

The Phase One agreement from the Trump administration's first term "committed China to purchase an additional $200 billion in U.S. ag products over the next two years," Morgan explains. "China didn’t complete the promised purchases after Trump lost the election, but made massive corn buys in 2020, including the biggest single-day U.S. corn purchase on record in July 2020."

The U.S. has already lost ground to Brazil, which is now the world's top corn exporter. Still, some economists see trade war 2.0 as an opportunity for U.S. agribusiness to gain ground in key areas, including biofuels, cotton, livestock production for sales in Europe, and overall exports to China. 

When asked "how long it would take to restore American manufacturing, 47% responded never, 29% said 10 years and 24% said at least five years," Morgan adds. "The risks are high. Unless the U.S. invests in domestic manufacturing over an extended period, the loss from exports could be a big hit to ag commodities. But if the Trump administration can gain more trade access to key countries, the rewards could be even bigger."