What Happens to U.S. Farm Exports If America Stops Trading with Its Deficit Countries?

The President recently raised an unusually broad trade-policy possibility: if the Federal Reserve does not lower interest rates, the United States could stop trading with countries with which it runs a trade deficit. The President reiterated the threat over the weekend ahead of the Federal Reserve's September meeting. Whether such a sweeping policy would ever be implemented is a separate question. A complete cutoff of trade with U.S. deficit partners would represent an extraordinary change in U.S. trade policy, and for now, the statement is best viewed as a hypothetical scenario rather than a trade forecast. For agriculture, however, the statement raises a useful analytical question: What happens when a country that sells more goods to the United States than it buys overall is simultaneously a major customer for American farmers?

The answer matters because an overall bilateral trade deficit does not mean that every U.S. industry runs a deficit with that country. In several important markets, agriculture runs strongly in the opposite direction. China, Japan, South Korea, and Vietnam are particularly striking examples. The United States runs large overall goods deficits with all four. Yet U.S. agricultural trade with every one of them generates a surplus. If trade were stopped simply because the overall bilateral balance was negative, U.S. agriculture would not be eliminating deficits in these markets. It would be walking away from export surpluses.

Four countries, two very different trade stories

U.S. Census Bureau data show that in calendar year 2025, the United States recorded an overall goods trade deficit of $202.7 billion with China, $178.3 billion with Vietnam, $64.4 billion with Japan, and $56.5 billion with South Korea. Together, the four accounted for an overall U.S. goods deficit of approximately $501.9 billion. Agriculture tells almost the mirror image of that story. USDA Global Agricultural Trade System (GATS) data show that during FY2025, the United States exported approximately $42.5 billion of agricultural products to these four markets while importing only about $11.5 billion from them. That left U.S. agriculture with a combined trade surplus of approximately $31.0 billion.

Figure 1. 2025 Overall U.S. Trade Deficit vs Agricultural Trade Surplus

Note: The different reporting periods should not be interpreted as components that mathematically reconcile with one another. We are using them to compare the direction and magnitude of the overall and agricultural trading relationships. The contrast is nevertheless clear. A country can contribute substantially to America's overall goods deficit while simultaneously generating a large agricultural trade surplus for the United States.

These agricultural surpluses are not a one-year anomaly

Looking back several years makes the distinction even clearer. Japan generated an agricultural surplus for the United States of roughly $11 billion in each of the last three complete fiscal years. South Korea's surplus increased from $6.4 billion in FY2023 to $7.6 billion in FY2025. Vietnam remained a net agricultural export market throughout the period. China, however, is different. Its agricultural surplus has deteriorated dramatically, falling from $29.2 billion in FY2023 to $20.1 billion in FY2024 and $11.3 billion in FY2025.

But even after that decline, the agricultural balance remained strongly in the United States' favor.

Figure 2. U.S. agricultural trade surplus with the four deficit markets

Market	FY2023	FY2024	FY2025
China	+$29.2B	+$20.1B	+$11.3B
Japan	+$11.2B	+$10.8B	+$11.3B
South Korea	+$6.4B	+$6.6B	+$7.6B
Vietnam	+$0.6B	+$0.3B	+$0.8B
Combined	+$47.5B	+$37.8B	+$31.0B

Source: USDA GATS. Fiscal years, October–September. Balance equals U.S. agricultural exports minus agricultural imports.

The decline in the combined surplus from $47.5 billion to $31.0 billion is overwhelmingly a China story. The other three relationships have been comparatively stable or improving. That distinction matters because these are not four interchangeable export markets. Their importance to U.S. agriculture, their commodity composition, and their current trajectories differ considerably.

The same pattern continues in 2026

The latest available data reinforce the point. Census data through July 2026 continue to show large overall U.S. goods deficits with all four countries: $138.9 billion with Vietnam, $91.2 billion with China, $46.2 billion with South Korea and $26.5 billion with Japan. Agriculture again moves in the opposite direction. During October–July FY2026, U.S. agricultural exports to these four markets reached $34.4 billion, compared with $9.1 billion in agricultural imports. The resulting agricultural surplus was $25.3 billion with two months still remaining in the fiscal year.

Figure 3. U.S. agricultural trade with the four markets, FY2026 through July

Market	Ag exports	Ag imports	Ag balance	Export change Y/Y
China	$10.53B	$3.43B	+$7.11B	-32%
Japan	$11.04B	$1.06B	+$9.98B	+5%
South Korea	$8.29B	$1.65B	+$6.65B	+2%
Vietnam	$4.53B	$2.92B	+$1.61B	+24%
Total	$34.40B	$9.06B	+$25.34B	-9%

Source: USDA GATS, October 2025–July 2026. Year-over-year comparison is against October 2024–July 2025.

The combined numbers also show how heavily China continues to influence the direction of U.S. agricultural trade with these markets. Despite strong export growth to Vietnam and gains in Japan and South Korea, total U.S. agricultural exports to the four countries fell about 9% year over year through July. The decline was driven overwhelmingly by China, where exports dropped 32%. Without that contraction, the other three markets collectively were expanding. This is an important distinction: the current weakness across these four major agricultural-surplus markets is not broad-based, but highly concentrated in the U.S.-China trade relationship. That brings us to the more practical question: if trade with these countries actually stopped, which parts of American agriculture would lose customers?

China remains fundamentally a soybean story

U.S. agricultural exports to China totaled $10.5 billion through July FY2026, down 32 percent from the comparable period a year earlier. Soybeans alone accounted for $5.45 billion and approximately 12.4 million metric tons of those shipments. The decline has been severe. During the comparable October–July period a year earlier, China bought $9.42 billion and 21.6 million metric tons of U.S. soybeans. Export value therefore fell 42 percent, and volume declined by more than 9 million metric tons. Yet even after that contraction, soybeans still represented more than half of all U.S. agricultural export value to China. That makes the soybean sector particularly exposed to any additional disruption. The relationship is not uniformly declining, however. U.S. corn exports to China moved sharply in the opposite direction, rising from approximately $232 million during October–July FY2025 to $946 million this year. Volume increased from less than 0.9 million metric tons to approximately 3.9 million metric tons. Other agricultural sectors also retain exposure to the Chinese market, including pork, dairy, poultry, feed products, and processed foods. But for U.S. agriculture as a whole, the largest direct risk remains clear: China remains an exceptionally important soybean customer, even after the sharp decline already seen in FY2026.

Japan may be the clearest example of the problem with the bilateral deficit

Japan presents a very different agricultural relationship. The United States ran a $64.4 billion overall goods deficit with Japan in 2025, yet in FY2025, U.S. agriculture generated an $11.3 billion surplus with the country. That surplus has also been remarkably consistent: $11.2 billion in FY2023, $10.8 billion in FY2024, and $11.3 billion in FY2025. Through July FY2026, Japan purchased another $11.04 billion of U.S. agricultural products while sending only about $1.06 billion of agricultural goods in the opposite direction. The agricultural surplus was therefore nearly $10 billion in only ten months. More importantly, Japan is not a single-commodity agricultural market. U.S. corn exports reached approximately $2.72 billion and 12.3 million metric tons through July. Japan also purchased $1.49 billion of U.S. beef and $1.13 billion of pork. Soybeans accounted for another $926 million, while wheat and dairy were also substantial export categories. A trade cutoff with Japan, therefore, would reach across row crops and animal agriculture simultaneously: corn and soybean growers, cattle and hog producers, wheat farmers, dairy producers, and the processing, transportation, and export industries surrounding them. The overall U.S. deficit with Japan is real. So is the nearly $10 billion agricultural surplus currently sitting inside that much larger trading relationship. Both can be true at the same time.

South Korea is another major grain and livestock market

South Korea produces much the same contradiction. The United States recorded a $56.5 billion overall goods deficit with South Korea in 2025.  U.S. agriculture, meanwhile, recorded a $7.6 billion surplus. Through July FY2026, U.S. agricultural exports to South Korea reached $8.29 billion, against imports of only $1.65 billion. Beef was the largest consumer-oriented category at approximately $1.84 billion. Corn exports reached $1.71 billion and 7.8 million metric tons, with corn export value up 28 percent from the comparable period a year earlier. Pork contributed approximately $559 million, while dairy and wheat were also important components of the relationship.

Japan and South Korea together purchased approximately $19.3 billion of U.S. agricultural products during the first ten months of FY2026. These are established, high-value markets for the very sectors in which the United States has traditionally relied on export demand: feed grains, meat, oilseeds, wheat, and dairy.

Vietnam may be the most interesting growth story

Vietnam is a smaller agricultural market than China, Japan, or South Korea, but its trajectory makes it particularly relevant. The overall U.S. goods deficit with Vietnam reached $178.3 billion in 2025. Through July 2026, it had already reached $138.9 billion. Agriculture is moving in precisely the opposite direction. U.S. agricultural exports to Vietnam increased 24 percent year over year to $4.53 billion through July FY2026. Imports were approximately $2.92 billion, leaving the United States with a $1.61 billion agricultural surplus, already twice the surplus recorded during the entire FY2025. Vietnam's agricultural purchases are also increasingly diversified. Tree nuts were the largest individual category in the GATS data at approximately $590 million. Soybean exports reached $510 million and 1.17 million metric tons. Corn totaled about $399 million and 1.08 million metric tons, while cotton exports reached approximately $368 million. The growth rates are notable. Corn export value increased by 55 percent year over year, cotton by 34 percent, and soybeans by 20 percent. Total U.S. bulk agricultural exports to Vietnam rose 32 percent to approximately $2.42 billion. Vietnam, therefore, illustrates the central issue particularly well. It is one of the countries contributing most heavily to America's overall goods deficit while simultaneously becoming a more important customer for American agricultural products.

Figure 4. U.S. Agricultural Exports, October–July FY2026

Nearly one-quarter of U.S. agricultural exports

The scale of the four markets deserves some perspective. Total U.S. agricultural exports reached $176.3 billion in FY2025. China, Japan, South Korea, and Vietnam collectively purchased $42.5 billion. That means four countries selected solely because they combine an overall U.S. goods deficit with an agricultural surplus accounted for approximately 24 percent of total U.S. agricultural exports. And that calculation does not include Canada, Mexico, the European Union, India, or other countries with which the United States also runs overall goods deficits, but where agriculture itself runs a deficit. A literal cutoff of trade with all U.S. deficit partners would therefore expose considerably more agricultural trade than the $42.5 billion represented by the four markets examined here. These four simply illustrate the contradiction most clearly: agriculture is a net exporter to them.

The current agricultural outlook depends on expanding exports, not shrinking the customer base

The timing also matters. USDA's August agricultural trade outlook forecasts U.S. agricultural exports increasing from $179.5 billion in FY2026 to $186.5 billion in FY2027, a $7 billion increase. China plays an especially important role in that forecast: the USDA projects agricultural exports to China to rebound from $12.0 billion in FY2026 to $21.5 billion in FY2027. Soybeans account for roughly half of the USDA's projected increase in total U.S. agricultural export value, while soybean meal exports are also expected to expand.

The contrast is difficult to ignore. The current USDA outlook assumes that expanding foreign demand, particularly a recovery in China, will help lift U.S. agricultural exports next year. A literal application of a no-trade-with-deficit-countries approach would remove several of the very markets on which agricultural export growth depends. This does not mean the political statement will become policy. It does illustrate why the implications for agriculture are very different from those suggested by the headline bilateral trade balances.

A bilateral deficit does not tell us who benefits from trade

The broader lesson is not that bilateral trade deficits do not matter. They provide information about the overall flow of goods between two economies. What they do not tell us is how individual sectors participate in that relationship. A country can sell far more goods to the United States than it buys overall while simultaneously providing a large and profitable market for American agriculture. China, Japan, South Korea, and Vietnam demonstrate that clearly. The commodity data make the consequences more tangible. China remains critical to soybean growers. Japan is a major destination for corn, beef, and pork. South Korea is a major importer of beef, corn, and other agricultural products. Vietnam is becoming increasingly important for tree nuts, soybeans, corn, and cotton. Together, those four countries bought $42.5 billion of U.S. agricultural products in FY2025. Through July of FY2026, they had already purchased another $34.4 billion. If trade were stopped simply because the overall bilateral balance was negative, the United States would not only stop importing from deficit countries. American farmers would stop exporting to them. And in the four markets examined here, U.S. agriculture would be walking away from a surplus, not a deficit.

Data and methodology

Agricultural trade data in this analysis are from the USDA's Global Agricultural Trade System (GATS) and use the USDA's "Agricultural Products" definition. Full-year agricultural data refer to federal fiscal years running from October through September. FY2026 year-to-date data cover October 2025 through July 2026. Overall bilateral goods trade data are from the U.S. Census Bureau's country trade tables and are reported on a calendar-year basis. CY2025 data are used for the primary comparison, while January–July 2026 data are cited to confirm that the overall deficit relationships remain in place. Because the Census and GATS reporting periods differ, overall goods and agricultural balances are used for analytical comparison and should not be interpreted as a direct reconciliation of accounting components. USDA FY2026 and FY2027 agricultural trade forecasts are from the August 2026 Outlook for U.S. Agricultural Trade.