Food for Thought

There has been a not unexpected but nonetheless disturbing development recently: the U.S. Department of Agriculture announced that it expects the 2025 deficit in agriculture trade to be a record $42.5 billion, a significant increase over 2024’s expected $30.5 billion, which was already a record. This would be the fifth annual deficit in just seven years, after at least 52 years of surplus. The increase is due in part to expected lower exports of commodity crops, including corn, soybeans, and cotton, as well as beef. Geographically, the forecast predicts a $3 billion drop in exports to China and smaller declines to Canada and Mexico, our two other major trading partners. This is a troubling development, as agriculture trade surpluses, along with the surplus in services, have for decades been bright spots in our otherwise negative trade balance.

There appear to be a number of reasons for this development. One involves arithmetic: low commodity prices in the United States have meant that the value of our exports is less, even if the quantity remains the same. Imports of higher-priced specialty products also expand the deficit. Additionally, shipping disruptions due to the war in Ukraine and the Houthis’ disruption of Red Sea traffic, along with associated insurance cost increases and longer travel times, have complicated exporting.

Going back in history a bit, the export declines became a bigger problem because of former president Donald Trump’s China tariffs. Chinese retaliation included shifting agriculture purchases to other countries, most notably soybeans from Brazil. Trump’s response was to pay off farmers with subsidies for a year or two, but that did not change the situation on the ground. The United States’ share of the China market has not fully recovered from that and the disruptions caused by Covid-19, and probably will not, even if the tariffs are eventually removed.

Another reason for the decline has been the past two administrations’ unusual lack of interest in exporting. While both have given lip service to exports, neither has pursued export promotion and market development as aggressively as their predecessors. This may be because both Trump and Biden look at trade from the perspective of imports and the perceived harm they do to the U.S. economy. Farmers, of course, who have a more direct stake in the outcome, have the opposite view.

While neither presidential candidate has, so far, spent time discussing the issue, congressional Republicans have not hesitated to make an issue out of it. Most recently, Senator John Boozman (R-AR) said, “The Biden-Harris administration is failing our farmers, ranchers and foresters when it comes to maintaining our competitive advantage in the global marketplace.” Senator Chuck Grassley (R-IA) posted a similar comment on X (formerly Twitter), and earlier this year groups of House and Senate members expressed similar views in letters to U.S. trade representative Katherine Tai and U.S. secretary of agriculture Tom Vilsack.

These points are well-taken, although the Republicans conveniently ignore the fact that Trump was also at fault and a primary cause of the problem in the first place. However, the immediate problem has been the Biden administration’s refusal to engage in trade negotiations that involve increasing market access. While Ambassador Tai has told farmers from time to time that the administration supports greater market access for U.S. agricultural products, she has yet to acknowledge that the only way to achieve this is through reciprocal trade agreements. Other countries are not going to grant our farmers access to their markets for free; they have plenty of their own produce they would like to export to the United States. Ambassador Tai encountered this directly several years ago when she went to India to discuss a digital trade agreement and returned having made concessions on Indian mangos and pomegranates, giving new meaning to the term “low-hanging fruit.” However, this has turned out to be an anomaly that has not been repeated. Current major negotiations, the Indo-Pacific Economic Framework for Prosperity and the Americas Partnership for Economic Prosperity, explicitly exclude market access, and there is little reason to hope either presidential candidate will make a significant change to this policy.

Meanwhile, Congress has an opportunity to tackle part of the problem via the farm bill currently under consideration. The version approved by the House Committee on Agriculture includes large increases in funding for the Market Access Program and the Foreign Market Development Program, with Senate Republicans making a similar proposal. (The Senate Agriculture Committee has yet to act on a bill.) Currently, progress on the legislation, already a year overdue, is tied up in disagreements over other matters, making a resolution unlikely before the election. Postponement beyond September 30 would require a further extension of the 2018 Farm Bill.

Real progress, however, depends on a different attitude by the incoming administration. Yet with both candidates focused on manufacturing employment, U.S. farmers may once again find themselves low on the priority list.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.