As the U.S. struggles to define its international trade policies, China and South America move forward together

A direct trade route from the Port of Chancay, Peru, to Shanghai, China, decreases 
transit time and lowers costs. (Investigate Midwest map)

Despite the financial boost China's purchase of 12 million tons of soybeans gave some U.S. farmers this year, the shift in Beijing's trading partners doesn't bode well for future U.S. crop sales. China has spent the past decade fostering global relationships outside of trade with the U.S., with a particular focus on South America.

China has invested in nearly two dozen seaports throughout Latin American, which create a "logistics network to support China's growing trade with the region," reports Mónica Cordero of Investigate Midwest. "These seaport investments range from multi-billion-dollar deep-water terminals to smaller upgrades that improve rail links, storage capacity, and ship turnaround times."

COSCO Shipping, a Chinese state-owned company, has been investing in Peru's Pacific-facing Port of Chancay. "The $3.54 billion project marks a major expansion of China’s Belt and Road Initiative into Latin America," Cordero writes. "From Chancay, the promise is that ships will reach China faster, a critical advantage for agricultural products."

Many experts point to the U.S.-China trade war that began in 2018, during President Donald Trump's first term, as the reason China began shunning American agriculture. Cordero explains, "But since returning to office, the president has renewed that strategy, and China’s investments signal a generational shift that may not reverse if and when the trade war subsides."

Without sales to China, American soybean farmers are in a particularly vulnerable position. Cordero reports, "Nationwide, more than 270,000 farms grow soybeans. . . . In Illinois, nearly half of all farms depend on soybean production, and in Iowa and Minnesota, about four in 10 do." 

"As China establishes new trade routes across Latin America, every new port or shipping lane makes a future recovery for U.S. farmers more challenging," Cordero writes. April Hemmes, an Iowa soybean farmer, told Cordero, "The only way that we become their top choice would be if our soybeans were far cheaper than South America’s.”