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U.S. agricultural exporters caught in middle of trade war with China

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While President Donald Trump and Chinese leader Xi Jinping have agreed to meet at the G20 Summit in Japan next week, the U.S. agriculture industry remains skeptical that the ongoing tariff battle between the two countries will end anytime soon.

U.S. soybean exporters said exports are down by 12 million metric tons compared to last year, which is largely because of the trade standoff with China.

“Once China assigned that 25 percent tariff on soybeans, it basically priced us out of their market,” Mike Steenhoek, executive director of the Soybean Transportation Coalition told FreightWaves.

Soybean exporters have been working to diversify their customer base and have dramatically increased shipments to countries like Pakistan, Egypt and Bangladesh. However, Steenhoek said there is only one country like China that has nearly 1.4 billion people “with an insatiable appetite for pork and chicken and cooking oils made from soybeans.”

Soybean meal is used to feed China’s livestock.

“Because China isn’t buying U.S. soybeans, it’s turning to countries like Argentina, which is one of our biggest competitors,” Steenhoek said.

The large soybean demand by China has forced Argentina to look to the U.S. to supply the product for its domestic market.

“The situation in China clearly remains a real concern,” he said. “Every indication that I’ve heard is that the best outcome for the [G20] meeting will be just an agreement to basically restart discussions between the two countries because we’ve been at a standstill for a period of time,” Steenhoek said.

The U.S. exported roughly $250 billion worth of goods to China in 2018, according to Erin Ennis, senior vice president of the US -China Business Council. The trade association represents more than 200 American companies that do business with China.

“All of the data that we have seen from both US and Chinese economists, is that throughout 2018, the tariffs actually had zero impact on China’s economy,” Ennis said recently at the Agriculture Transportation Coalition’s annual meeting. “China has yet to feel the pain of the tariffs that the United States has put in place.”

Prior to 2018, U.S. agriculture products were one of the country’s top five largest exports to China. However, since the tariff battle started nearly a year ago, agriculture goods have dropped out of that top five list in most states, she said.

“The hard facts are that as long as the tariff battle is in place and China has retaliatory tariffs against U.S. agriculture products, many [exporters] are going to be priced out of the market,” Ennis said.

Eli Minton of Best Drayage, a brokerage headquartered in Gustine, California, said tariffs on agriculture exports have drastically hurt his business. His company, located in California’s Central Valley, exports nuts like almonds, walnuts and pistachios to countries like China, Korea, India and Israel.

Since the tariff war started, Minton’s brokerage business also has slowed down and there are fewer containers for around 30 truckers he works with that haul containers to and from the Port of Oakland.

Some of his drivers are leaving the drayage segment because of the volume slowdown at the port, Minton said.

“Without consistent business, it’s been really hard on the truckers because they still want to truck, but container moving is so hit or miss right now,” Minton told FreightWaves.

“Our customers are having to radically diversify and are having to build a new supply chain network,” he said. “The costs associated with this process are outrageous because when our customers need to change on the fly, we have to change with them.

“You feel pressured to bring your rates down in order to keep customers within their margins so they can make a profit,” Minton said. “We are hitting the pavement, doing a lot more cold calls to customers to increase our volume on the road because our numbers are way down.”

Jennifer Adams, branch manager of Sprint Forwarders in Seattle, Washington, said one of her seafood shippers that once exported its fish meal products to China prior to the tariffs, has diversified its operation and is now selling its products in the U.S.

She said the volume of goods shipped to China is significantly down, but that her customers are diversifying and exporting products to other countries.

“We still export a lot of products from the West Coast into Asia, but shipments are now going to Japan, Korea, Taiwan and Southeast Asia, not much to China,” Adams told FreightWaves.

After a rush by shippers in January to get their products into the U.S. before the tariffs hit, business has slowed way down, Beth Sanchez, general manager of Provisioners Warehouse and Transportation Services in Seattle, Washington, told FreightWaves.

She said business is down around 30 percent compared with the same timeframe a year ago because of the tariffs.

“Our business should be up a lot more, but I think everybody is still holding their breath waiting to see what China’s going to do,” she said.

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Clarissa Hawes

Clarissa has covered all aspects of the trucking industry for 14 years. She is an award-winning journalist known for her investigative and business reporting. Before joining FreightWaves, she wrote for Land Line Magazine and If you have a news tip or story idea, send her an email to [email protected]