Our way out: can Russian farmers replace the United States in China
While the trade war between the United States and most of the world has paused a bit, it is only gaining momentum with China. In response to the tariffs on Chinese imports to the United States exceeding 100%, China has taken its own steps, including not only raising tariffs in some cases to 99%, but also tightening control measures for many types of products, up to outright bans. In many circumstances, food supplies from the United States to China will become unprofitable. Izvestia investigated whether this situation is a good opportunity for the Russian agro—industrial complex to join the game and win back an additional share of the world's largest Chinese market.
A calculated move
During the previous and less comprehensive trade war in the first presidency of Donald Trump, China retaliated primarily against American agricultural products. The meaning of these steps was well calculated: firstly, the share of direct losses from duties for agricultural producers is higher than the average for the economy. Secondly, the worst damage was inflicted on American farmers, who are overwhelmingly the electorate of Trump and the Republicans. In total, China's countermeasures led to a reduction in food exports from the United States to China by $25.7 billion.
US President Donald Trump
This time it could be even worse. The duties adopted in 2018-2019 were quite moderate. Their size is much bigger now. Initially, China set a barrier of 10-15% in March, then added another 34% in April, and another 50% this week. As a result, Daria Snitko, Vice president and head of Gazprombank's analytical department, told Izvestia, duties will amount to 94% for soybeans, sorghum, pork, beef, fish and some other products, and 99% of the base level of duties for corn, wheat, and chicken meat. In fact, such a high tariff bar is a barrier to foreign trade.
China consumes a lot of American food, mainly food raw materials. In 2024, shipments of related products from the United States to China reached $27 billion. This is 14% of all food exports from the United States, China ranks third in this list after Mexico and Canada. The situation will particularly affect soybean producers, whose losses are tentatively estimated at $5.7 billion (the estimate was made before the increase in Chinese duties to 99%).
Russia is in the game
Russia has so far been little affected by trade wars, both negatively and positively. The United States has not imposed duties on the Russian Federation, because after the imposition of sanctions, trade between the countries is already near zero. There is a threat of a decline in oil prices due to the general weakening of the global economy, but this effect is indirect. At the same time, in most industries, Russian businesses are not yet ready to take up positions that may become vacant due to harsh tariffs. Agricultural exports to China may be one of the few exceptions.
This indicator is already increasing year by year. In 2023, the growth was 34%. In 2024, exports also increased in most positions. For example, in February, for the first time in history, the Chinese allowed three pig breeding complexes from Russia to enter their market. The shipments for the year turned out to be not so big — in the region of 38 thousand tons (almost imperceptibly in the total volume of pork consumption in China, which is about 60 million tons), but for a start it is quite good. Soybean supplies increased by almost 90%. And among the main exporters of sunflower and rapeseed oil to China, Russia completely dominates, accounting for 60% of all supplies, although five years ago its share did not exceed 10%.
Wheat is a separate topic. The most important component of Russian agricultural exports (52 million tons last agricultural year) has long experienced serious difficulties in conquering the Chinese market. Until the 2010s, shipments were generally banned by the Chinese government due to infection of Russian wheat with dwarf smut (a disease caused by a fungus). Since 2015, the import of wheat grown in four regions of the Asian part of the country has been allowed. Grain from all over Russia was allowed to be supplied only on February 24, 2022. But even in this case, there was a caveat: China was ready to accept only spring wheat (most of this type of grain in Russia is winter). Even with this condition, exports to China grew rapidly (in January–November last year, it increased three times).
"It is impossible to sharply increase exports"
Now circumstances may change again — if the tariff war does not stop. Although, apparently, under any circumstances, some duties from China and the United States will remain in force. The vacated volumes in Chinese imports can also be occupied by Russian suppliers, Daria Snitko believes.
— Russian exporters of pork, soybeans, fish, and corn have the opportunity to increase volumes at a competitive price. But we should not expect that we will replace the entire outgoing volume of American goods, Brazil will remain the main beneficiary in this confrontation, which will really be able to expand its capacity for such supplies," the interlocutor comments.
She added that changes in global trade should accelerate the processes of unifying requirements and allowing Russian products to enter new markets, but this work does not fully depend on the market conditions.
"Since the launch of the program to support the export of agricultural products from Russia, there have been many consultations on the admission of various products to the Chinese market, for example, the export of pork was a natural success of bilateral negotiations and the long—term work of various departments," Snitko added.
Denis Ternovsky, a leading researcher at the Center for Agri-food Policy at the Institute of Applied Economic Research of the Presidential Academy, in turn, notes that Russian agricultural exports, to the extent that they competed with American products in the Chinese market, are mainly represented by crop products with limited processing depth.
— The cost of exports is determined by two factors: the physical volume, or quantity of supplies, and their price. It is impossible to dramatically increase the physical volume of exports — it is limited to agricultural production, which is very sluggish due to the long cycle of crop cultivation. It can be said that certain foreign trade restrictions may reorient commodity flows in the short term, but not change their size. At the same time, in the medium and long term, the release of niches in the Chinese market will provide an incentive to expand Russian agricultural production, the expert believes.
According to Ternovsky, trade restrictions also affect prices. On the one hand, the forced withdrawal of American manufacturers from the Chinese market may raise prices for other importers, including Russian ones. On the other hand, the policy of large-scale trade restrictions can collapse commodity markets, and consequently, prices for agricultural products.
— The strict conditions for the supply of winter wheat to the Chinese market fit into China's policy of reducing dependence on imports of these products. The expected easing of conditions is more likely to be the result of successes in the development of Russian-Chinese relations than an attempt to replace American wheat, whose share in Chinese imports is small and declining," concluded the Izvestia interlocutor.
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