The runner-up for most of this decade, Canada replaced China as the top market for U.S. farm exports in the fiscal year that ended on September 30 because of the Sino-U.S. trade war. USDA economists say China slipped to third place, behind Mexico, in fiscal 2018 and will fall to No. 5, trailing the EU and Japan in the new year.
“Agricultural exports to China are forecast down $7 billion from fiscal 2018 to $12 billion, as soybean sales are expected to be sharply lower due to retaliatory tariffs, which also curb demand for other products,” says USDA in its first forecast of ag exports in fiscal 2019. In May, USDA forecast $21.8 billion in sales to China in fiscal 2018; the updated estimate for 2018 is $19 billion.
While exports to China plunge, Canada and Mexico would remain steady customers despite their own trade disputes with the U.S. The North American neighbors account for one third of U.S. food and ag trade flow. President Trump says he will proceed with a trade agreement with Mexico “and with Canada, if it is willing,” to replace NAFTA.
Overall, U.S. farm exports totaled $144 billion in fiscal 2018, says USDA – the second-best year ever. Sales would creep upward to $144.5 billion in fiscal 2019, fueled by strong economic growth worldwide. Pat Westhoff of the FAPRI think tank says the USDA forecast of strong 2019 sales is a reminder that trade “depends on a lot more than trade policy.”