Author: Andrew Muhammad

Established following the May 2026 summit between President Donald Trump and Chinese President Xi Jinping, the U.S.-China Board of Trade is a new bilateral initiative aimed at rebuilding commercial ties between the U.S. and China by reducing trade barriers, addressing tariff disputes, and encouraging trade between countries (USTR, 2026). Implementation details, including which products will be covered, how procurement commitments will be measured, and how compliance will be enforced, are still being finalized. 

In a recent bipartisan letter to U.S. Trade Representative Jamieson Greer, members of Congress urged the Administration to explicitly include “American hardwood lumber” in the newly established framework, to ensure that China’s procurement commitments prioritize U.S. hardwood lumber. The lawmakers argue that restoring access to the Chinese market is critical for the U.S. hardwood industry. As noted in the letter, the industry has suffered nearly $10 billion in lost sales and a 48% decline in domestic hardwood lumber production since the onset of the U.S. trade war with China in 2018. See the following link for a full copy of the letter: https://www.shaheen.senate.gov/imo/media/doc/ustr_hardwood_letter.pdf. 

The importance of this letter becomes clearer when viewed in the context of the hardwood industry and declining export sales, especially to China. 

The U.S. is one of the world’s leading producers and exporters of hardwood logs and lumber, with exports providing an important source of income for forest landowners, sawmills, and rural communities. Hardwood exports are particularly significant in the U.S. South, a region characterized by abundant timber resources and a strong dependence on international markets for sales. For instance, the largest hardwood export category, oak lumber (red and white), was valued at $873 million in 2025, led by exports from the South ($327 million) where North Carolina, Virginia, Tennessee, and Kentucky are top suppliers. It is important to note that prior to the 2018 trade war, U.S. oak lumber exports were $1.3 billion. In 2017, China accounted for more than 60% of U.S. oak lumber exports. This decreased to 34% in 2025 (USDA, 2026).

Trade data show just how important the Chinese market has been for southern hardwood producers (See Figure 1). Exports of hardwood products from the South experienced strong growth after 2010, driven largely by rising demand from China. Southern hardwood lumber exports to all destinations increased from roughly $500 million in 2010 to more than $1.2 billion in 2017, while exports to China alone grew from less than $200 million to nearly $700 million over the same period. This pattern highlights the central role that China played in expanding markets for southern hardwood producers. Hardwood log exports also benefited from Chinese demand, although growth was more modest than for lumber.

The 2018 trade war marked a clear turning point. Following retaliatory tariffs imposed by China, hardwood lumber exports to China fell sharply, dropping by nearly half between 2018 and 2019. Exports have never returned to their pre-trade-war levels and continued to decline through 2025. Lumber exports from the South to all countries also trended downward after 2018, suggesting that losses in the Chinese market were only partially offset by sales to other destinations. Southern hardwood log exports have also weakened, although they have generally been more stable than lumber exports. Overall, the figure shows how deeply the southern hardwood industry depended on China before 2018 and how the trade war fundamentally altered exports. 

Rebuilding trade with China could help strengthen the southern hardwood industry. Among overseas markets, China emerged as one of the most important destinations for U.S. hardwood products. Expanding furniture manufacturing and increasing demand for high-quality wood materials contributed to a substantial rise in U.S. hardwood exports to China. As a result, many U.S. hardwood producers became increasingly reliant on Chinese demand. These exports supported employment, investment, and forest management activities throughout southern states. 

Figure 1. U.S. Hardwood Exports from Southern States to All Countries and China: 2010-2025

For more information:

Office of the United States Trade Representative (USTR) (2026). USTR Seeks Public Comment on the Scope and Operation of a Mechanism to Promote Balanced and Reciprocal Trade with China. Press Release (June 02, 2026). https://ustr.gov/about/policy-offices/press-office/press-releases/2026/june/ustr-seeks-public-comment-scope-and-operation-mechanism-promote-balanced-and-reciprocal-trade-china

U.S. Department of Agriculture (USDA) (2026). Global Agricultural Trade System. Foreign Agricultural Service. https://apps.fas.usda.gov/gats/default.aspx

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Recommended citation format: Muhammad, Andrew. “Can the U.S. South Regain Its Hardwood Market in China?” Southern Ag Today 6(29.4). July 16, 2026. Permalink

Prior to 2019, the United States consistently recorded an agricultural trade surplus, meaning exports exceeded imports in value terms. For example, in fiscal year (FY) 2014, U.S. agricultural exports totaled about $152 billion, while imports were roughly $109 billion, yielding a surplus of $43 billion. This surplus steadily narrowed in subsequent years, falling to less than $5 billion by 2019. Since then, the trend has reversed, with the United States posting agricultural trade deficits over the past three years, culminating in a record deficit of approximately $44 billion in FY 2025, a stark contrast to the surplus observed a decade earlier (USDA-ERS, 2020; 2026).

Given the current White House Administration’s emphasis on bilateral trade imbalances, leadership at the U.S. Department of Agriculture has followed suit, increasingly framing the reduction of the agricultural trade deficit as a key policy objective. However, focusing on the agricultural trade deficit as a target can be misleading, as it obscures the broader economic forces shaping trade flows—a point discussed in previous Southern Ag Today articles. For instance, rising U.S. imports of agricultural goods may reflect not declining competitiveness, but stronger consumer demand for a more diverse set of products, including off-season fruits and vegetables as well as higher-value items such as beer, wine, and spirits. Moreover, a narrow emphasis on the trade deficit ignores the highly integrated nature of modern agricultural supply chains. For instance, the recent import ban on Mexican feeder cattle may contribute to a reduction in the agricultural trade deficit, but it would be difficult to argue that the U.S. beef sector is necessarily better off as a result.

That said, it is still useful to examine the agricultural trade deficit more closely. Recent year-to-date trade data (January–April) suggest a narrowing of the deficit compared to the same period last year. As of April 2026, the agricultural trade deficit stood at $7.5 billion, down 62% from $19.7 billion over the same period in 2025. On the surface, this could be interpreted as evidence of improvement, or even as an indication that current trade policies are working. However, caution is warranted in drawing such conclusions. 

Figure 1 presents year-to-date percentage changes in U.S. agricultural exports and imports, both in aggregate and across major export destinations and import suppliers. The data indicate that the narrowing of the deficit is driven more by declining imports than by strong export growth. Total U.S. exports increased modestly (+5.5%), while imports fell sharply (−11.5%), with particularly large declines in imports from the EU (−27.1%), Brazil (−24.6%), and Southeast Asia (−23.8%). What is driving these changes? The increase in exports is mostly China (+35.2%) due to a strong recovery in soybean and sorghum exports, both of which dropped to negligible levels in 2025. The decline in imports also appears to be concentrated in specific products, including beer, wine, spirits, and essential oils from the EU; coffee and beef fat from Brazil; and beverage sweeteners and cocoa products from Southeast Asia (USDA-FAS, 2026).

This raises an important question: are we truly better off if the narrowing deficit is driven primarily by declining imports rather than broad-based export growth across markets and products?

Figure 1. 2026 Year-To-Date (January–April) Percentage Changes in U.S. Agricultural Exports and Imports, Total and Major Partners

For more information:

U.S. Department of Agriculture (USDA-ERS) (2020). Outlook for U.S. Agricultural Trade. Economic Research Service. https://www.ers.usda.gov/media/10231/aes-111.pdf?v=93939

U.S. Department of Agriculture (USDA-ERS) (2026). Outlook for U.S. Agricultural Trade. Economic Research Service. https://www.ers.usda.gov/media/20882/aes-136.pdf?v=85005

U.S. Department of Agriculture (USDA-FAS) (2026). Global Agricultural Trade System. Foreign Agricultural Service. https://apps.fas.usda.gov/gats/default.aspx

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Recommended citation format: Muhammad, Andrew. “A Narrowing Agricultural Trade Deficit in 2026 – But Are We Better Off?” Southern Ag Today 6(25.4). June 18, 2026. Permalink

We often forget that beer, wine, and spirits are fundamentally agricultural products, rooted in the cultivation of corn, barley, rye, wheat, grapes, and other farm commodities. As a result, disruptions to alcohol trade are not just shocks to beverage markets, but direct blows to farmers, rural communities, and the wider agricultural economy that supplies these products (Muhammad et al., 2025). This broader agricultural story now runs straight through Canada, where trade tensions transformed alcohol import demand into a geopolitical statement. Canada has long been an important export destination for U.S. beer, wine, and spirits, supported by geographic proximity, integrated supply chains, and decades of tariff‑free trade. In 2024, for instance, Canada was the leading market for U.S. wine exports and the second leading market for U.S. distilled spirits and beer exports (USDA, 2026). This relationship shifted abruptly in 2025 when trade tensions escalated beyond conventional tariff retaliation and entered the retail marketplace.

At the heart of the disruption was Canada’s decision to remove American alcohol from store shelves entirely. Rather than relying solely on retaliation through tariffs, multiple provinces instructed their liquor authorities to stop purchasing and selling American beer, wine, and spirits. In early February 2025, the United States announced broad tariffs on Canadian imports. Canada responded in March with retaliatory tariffs on a range of U.S. goods, including alcohol (Kitamura, 2026). Provincial governments escalated further by directing liquor boards in Ontario, Quebec, British Columbia, Nova Scotia, and other provinces to halt purchases of U.S. alcohol and remove existing products from shelves and digital platforms. Throughout the spring and summer of 2025, these delistings remained largely in place, with only limited reversals in select provinces (DISCUS, 2026).

Figure 1 summarizes the year‑over‑year change in U.S. beer, wine, and distilled spirits exports to Canada between 2024 and 2025, reflecting the impact of the trade war on each product category. As shown in the figure, wine and related products experienced the largest decline, falling from $460 million in 2024 to $103 million in 2025, a 77.6% reduction or a $357 million loss. Distilled spirits exports declined from $238 million to $89 million, a 62.7% decrease, resulting in a $149 million loss. Beer exports also dropped sharply, falling from $47 million to $17 million, a 64.4% decline or $30 million loss. Taken together, total U.S. alcohol exports to Canada fell from $744 million to $208 million, a 72% decrease amounting to an overall dollar loss of $536 million. 

These shelf removals sent a clear political signal to U.S. policymakers while simultaneously encouraging Canadian consumers to substitute toward domestic or non‑U.S. products. It also exposed the vulnerability of exporters operating in markets where governments control distribution infrastructure, demonstrating how trade wars can extend beyond borders and tariffs to reshape retail availability itself. Even as some punitive measures were later eased, this episode underscored how quickly trade relationships built over decades can be disrupted when retaliation targets market access rather than prices alone.

Figure 1. U.S. Beer, Wine, and Spirits Exports to Canada: 2024 and 2025

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References

Distilled Spirits Council of the United States (DISCUS) (2026). Annual Economic Briefing https://distilledspirits.org/wp-content/uploads/2026/02/FINAL-DISCUS-Annual-Economic-Briefing-Presentation-2026-2.5.2026-11-AM.pdf

Kitamura, K.H. (2026) U.S.-Canada Trade Relations. Report IF12595. Congressional Research Service. https://www.congress.gov/crs-product/IF12595

Muhammad, A., Menard, R. J., and Smith, S. A. (2025). “Tennessee and Kentucky Distilled 

Spirits: What’s at Stake from a New Trade War?” Choices 40(3). https://doi.org/10.22004/AG.ECON.358876

U.S. Department of Agriculture (USDA) (2026). Global Agricultural Trade System. Foreign Agricultural Service. https://apps.fas.usda.gov/gats/default.aspx

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Muhammad, Andrew. “American Beer, Wine, and Spirits in Canada and the Fallout of the Trade War.” Southern Ag Today 6(15.4). April 9, 2026. Permalink

Now that the December 2025 trade data have been released, we can look back over the past fifteen years to evaluate how U.S. agricultural exports have evolved across major markets and how shifting global dynamics, especially the dramatic rise and subsequent decline of exports to China, have shaped overall performance. U.S. agricultural exports from 2010 through 2025 reveals a story of both stability and notable volatility. Total agricultural exports rose from $119 billion in 2010 to a high of $196 billion in 2022, before settling at $171 billion in 2025. Exports in 2025 were more than $5.0 billion lower than the previous year, driven primarily by reduced soybean shipments, along with declines in coarse grains, beef, wine, and rice. Much of the variation in U.S. agricultural trade can be traced to the dramatic rise and fall of U.S. exports to China, a market that transformed from the leading U.S. destination to a source of sharp decline. Indeed, the widening U.S. agricultural trade deficit, which grew from –$37.6 billion in 2024 to –$41.7 billion in 2025, stems largely from the steep collapse in exports to China (USDA, 2026). 

Figure 1 shows U.S. agricultural exports to the major destinations—China, Mexico, Canada, the European Union, and Japan. With the exception of China, most major U.S. export markets exhibit steady or gradually increasing demand, even during periods of heightened trade tensions and uncertainty. However, it’s hard to ignore the extremely volatile path of U.S. agricultural exports to China. Beginning at $18 billion in 2010, exports to China climbed substantially, peaking at $38 billion in 2022, primarily due to rising exports from the Phase One Trade Agreement and relatively high commodity prices. However, exports to China have significantly declined since, falling to just $8 billion in 2025, representing a loss of $30 billion in only three years. No other major market exhibits such a rollercoaster pattern. This deterioration also helps explain why total U.S. exports fell from $196 billion in 2022 to $171 billion in 2025, despite persistent exports elsewhere.

In contrast, exports to nearly every other major destination remained stable or even trended upward. Mexico increased from $15 billion in 2010 to $31 billion in 2025. Canada remained consistently strong, rising from $18 billion to $28 billion over the same period. The EU and Japan both show moderate, incremental increases, with none experiencing sharp swings comparable to China. Overall, recent trends illustrate two simultaneous dynamics: the inherent volatility of U.S. agricultural trade with China and the remarkable stability of U.S. exports to virtually every other major market. While the collapse in Chinese demand resulted in a noticeable drop in total exports after 2022, the resilience of other destinations helped buffer the decline. These trends highlight both the opportunities and the vulnerabilities that come with relying heavily on a single, now‑unpredictable trading partner.

Figure 1. U.S. Agricultural Exports to the Top Destination Markets: 2010–2025

Source: U.S. Department of Agriculture, Foreign Agricultural Service, Global Agricultural Trade System (GATS) (USDA, 2026)

Reference

U.S. Department of Agriculture (USDA) (2026). Global Agricultural Trade System. Foreign Agricultural Service. https://apps.fas.usda.gov/gats/default.aspx

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Muhammad, Andrew. “U.S. Agricultural Export Trends: Stability, Growth, and a China‑Driven Rollercoaster.” Southern Ag Today 6(11.4). March 12, 2026. Permalink

U.S. cotton is among the most export‑dependent agricultural commodities, with more than 80% of annual production moving into global markets rather than being used domestically (U.S. Department of Agriculture, 2026a). Although China has not always been a consistent buyer, importing less than 15% of U.S. cotton exports in some years and more than 30% in other years, it has nevertheless remained a somewhat reliable partner, accounting for nearly 30% of U.S. cotton exports in more recent years (2020–2024) (U.S. Department of Agriculture, 2026b). 

Once the most important market for U.S. cotton, China has become a far less reliable partner in 2025, as recent import patterns show greater volatility and reduced engagement with the U.S. agricultural sector. In 2025, China’s purchases of U.S. cotton fell from $1.5 billion to just $0.2 billion, an 85% decline, while its import volume dropped at nearly the same rate, from 0.8 million metric tons (MMT) to 0.1 MMT. In contrast, exports to markets outside China expanded substantially over the same period. The value of U.S. cotton exports to non‑China destinations rose from $3.5 billion to $4.6 billion, a 32% increase, while quantities surged 51%, from 1.7 MMT to 2.6 MMT (Table 1) (U.S. Department of Agriculture, 2026b). 

Why did China sharply reduce its imports of U.S. cotton? While the trade war and subsequent political tensions certainly accelerated the decline, the underlying shift runs deeper than tariffs. China’s overall import strategy has fundamentally changed as its domestic cotton sector has undergone major structural adjustments since 2010. Over the past decade, China has increased production, drawn down its massive state-held stockpiles, and reduced its dependence on foreign fiber. Since 2021 alone, domestic output has risen by more than 30% (U.S. Department of Agriculture, 2025a). As a result, China is increasingly able to meet the needs of its textile and apparel industry with domestic cotton rather than imports. Taken together, these developments suggest that China’s reduced reliance on U.S. cotton is not simply a temporary response to trade tensions but part of a longer-term realignment. 

Table 2 makes clear that the steep decline in U.S. cotton exports to China was not simply the result of tariffs or bilateral tensions, but part of a much broader contraction in China’s overall import demand. China’s total cotton import value fell from $5.3 billion in 2024 to $1.9 billion in 2025, while import volumes dropped from 2.6 million to 1.1 million metric tons. Every major supplier experienced significant losses: Brazil’s shipments fell by more than 50%, India’s collapsed by over 90%, and Australia also recorded substantial reductions.

The across‑the‑board declines underscore a structural shift in China’s sourcing strategy rather than a U.S.-specific outcome.

Table 1. U.S. Cotton Exports: 2024 and 2025

	2024	2025	Change	% Change
	Value ($ billion)
China	$1.5	$0.2	-$1.3	-85.1%
Total (w/o China)	3.5	4.6	1.1	32.0%
Total (w/ China)	5.0	4.8	-0.1	-2.8%
	Quantity (million metric tons)
China	0.8	0.1	-0.6	-84.6%
Total (w/o China)	1.7	2.6	0.9	51.0%
Total (w/ China)	2.5	2.7	0.2	9.6%
Source: U.S. Department of Agriculture (2026b)

Table 2. China’s Cotton Imports (Major Exporting Countries): 2024 and 2025

	2024	2025	Change	% Change
	Value ($ billion)
Total	$5.3	$1.9	-$3.4	-63.6%
Brazil	2.2	0.8	-1.4	-63.4%
U.S.	1.9	0.2	-1.6	-87.8%
Australia	0.7	0.6	-0.1	-13.8%
India	0.1	0.0	-0.1	-91.1%
Turkey	0.1	0.1	0.0	3.7%
	Quantity (million metric tons)
Total	2.6	1.1	-1.5	-59.2%
Brazil	1.1	0.5	-0.6	-57.8%
U.S.	0.9	0.1	-0.8	-86.8%
Australia	0.3	0.3	0.0	0.2%
India	0.1	0.0	-0.1	-90.9%
Turkey	0.1	0.1	0.0	-4.1%
Source: Trade Date Monitor®(2026)

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References

Trade Data Monitor®. (2026). https://tradedatamonitor.com/

U.S. Department of Agriculture (USDA) (2026a). PSD Online. Foreign Agricultural Service. https://apps.fas.usda.gov/psdonline/app/index.html#/app/advQuery

U.S. Department of Agriculture (USDA) (2026b). Global Agricultural Trade System. Foreign Agricultural Service. https://apps.fas.usda.gov/gats/default.aspx

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Muhammad, Andrew. “When China Stops Buying: Is this the New Reality for U.S. Cotton?” Southern Ag Today 6(9.4). February 26, 2026. Permalink