Guest Columns

Perspective:
Industry Issues

China and the United States: A look at their relationship

Ty Rohloff

Ty Rohloff is vice president, food and agribusiness, for Compeer Financial. He has nearly 20 years of experience in the food and agribusiness industry, including several years as a lender with Compeer
Financial. He is a guest columnist for this week’s issue of Cheese Market News®.

I am fortunate to have several opportunities each year to share timely insights on the dairy industry. A key challenge is understanding what resonates with readers. Recently, there has been considerable news regarding changes at the federal level. Tariffs and trade have been prominent headlines, becoming more formalized with President Trump’s Liberation Day on April 2, 2025. It’s likely that you are already well informed about who might be affected, the timing of tariff enactment, potential escalations and possible pauses. When I consider trade, China immediately comes to mind for several reasons. My aim here is to focus on China and its relationship with the United States. They are, for many reasons, a significant partner in agricultural trade, although perhaps less so than in the past.

• Who is China?
Simply put, China is a country governed by the People’s Republic of China. With a population of 1.4 billion, it is the second most populous nation after India. China is also the second-largest country by land area. Its government is a unitary one-party republic led by the Chinese Communist Party. Economically, China has become the world’s largest economy by PPP (purchasing power parity) and adjusted gross domestic product (GDP), and the second largest by nominal GDP, making it the second wealthiest country overall.

Over time, China has become the largest manufacturer and exporter, as well as the second-largest importer. Crucially, China is a nuclear-weapon state and possesses the world’s largest standing army in terms of personnel. Opinions on China’s defense spending vary. Publicly stated figures place China’s 2024 defense spending around $232 billion; however, some estimates reach as high as $700 billion, comparable to the United States’ allocation.

Historical context is also important. China began opening its economy in 1978, and since then, its GDP has averaged over 9% annually, lifting nearly 800 million people out of poverty. China was admitted to the World Trade Organization (WTO) in 2001.

To illustrate the growth in trade, in 1996, imports to the U.S. totaled $51.5 billion, rising to $102 billion in 2001 (the year of WTO entry) and further increasing to an estimated $439 billion in 2024. For those interested in U.S. exports to China, the figure was approximately $144 billion in goods! This indicates a significant trade imbalance, estimated at $295 billion. Historically, this represents a dramatic shift. Data from 1985 shows a trade differential of around $6 million in China’s favor.

• China’s relationship with the United States

The historical context is crucial for understanding the relationship between China and the United States. As mentioned earlier, their history as significant trading partners is relatively short. Nevertheless, I’ve highlighted some key characteristics of China and its population. One vital aspect of having a large population is the need for food. China has roughly 22% of the world’s population but only 9% of the world’s arable land. While the data is somewhat dated, as of 2018, China was the world’s largest producer of rice, the third-largest producer of sugarcane, the second-largest producer of corn and the largest producer of potatoes.

Interestingly, it was also the largest producer of apples. Focusing on our dairy audience, China is the fourth-largest dairy producer globally. Although its domestic herd and per-cow production are expected to increase, China remains dependent on imports, primarily milk powder, from countries such as New Zealand, Australia and the United States. In 2024, China imported a record 28.4 million pounds of butter and the third-highest amount of cheese on record, while whey imports were down from a near-record high. While China’s dairy consumption has fluctuated slightly, demand is increasing and is projected to grow by 2% annually in 2025.

I bring up China for two main reasons: first, it has the world’s second-largest population base, and second, it is key to the U.S.’s balance of dairy product demand. Global consumption is necessary to balance supply. The positive news is that U.S. dairy exports reached $8.2 billion in 2024 — the second-highest total export value ever — and 2025 has started strongly. Recognizing the value and consumption of U.S. dairy requires a collective effort.

• What’s the real impact?

The focus on China and the U.S. is driven by pending tariff actions. China is one part of our international relationships and plays a significant role in the global demand equation. Most other nations seem to have received leniency or a pause on further actions, while China remains a focal point. This could be due to the U.S.’s significant trade deficit with China, China’s perceived support for the Russia-Ukraine war, President Trump’s accusations of China supplying fentanyl and other drugs, or other underlying factors. Regardless, trade is vital to U.S. agriculture globally, and China’s population relies partly on the United States for food.

The readers of this analysis may have interests tied to trade and, more specifically, to imports from China. Long term, it is crucial for the dairy industry to continue demonstrating how U.S. dairy can help feed the world. Birth rates, dairy demand from Canada and Mexico, the value of the U.S. dollar, trade policies, interest rates and other factors will influence how the U.S. approaches the market. These are topics for future articles. That being said, the U.S. is well positioned to supply dairy to the global market.

• Future thoughts

In conclusion, four points to consider. First, a trade war with China could impact not only dairy demand but also numerous other sectors. Electrical machinery and equipment are immediately apparent. I also note that China is a major exporter to the U.S. of pharmaceuticals and ingredients, micro-ingredients, and rare earth minerals and their refining. These are key industries on which the U.S. relies. Are vitamins in animal nutrition and trace minerals in diets easily replaceable? Second, China and Brazil have a strong relationship in the oilseeds market.

China is Brazil’s largest trading partner, and Brazil is China’s ninth largest. Trade between the two countries amounted to $182 billion in 2023. It was only recently that the U.S. was China’s largest soybean supplier. Could there be increased investment in South America to meet additional dairy needs? Third, related to China, 2022 marked the first time deaths outpaced births since 1961. Some projections estimate China’s population could drop to 330 million by the end of the century.

Whether or not this occurs, what kind of market will China represent in the future? Lastly, where is the optimism for U.S. dairy? I still believe China is a significant consumer in the near term. Maintaining positive relations and securing trade deals could enhance this. Furthermore, Mexico has been an excellent partner in dairy trade, and the U.S. recognizes the importance of that market. Beyond these factors, Southeast Asia could be another positive driver for exports. Despite potential shifts in dairy manufacturing and processing, I am confident that the U.S. dairy industry excels, partly by contributing to global food supply and by identifying new opportunities and markets!

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.

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