Dive Brief:

• China will import U.S. rice for the first time, according to a Thursday announcement by the U.S. Department of Agriculture.
• The trade deal was announced at the end of high-level economic talks between the two countries, CNN Money reports. China is the world's largest producer of rice, but also its largest importer as the country is no longer able to sustain itself due to soil depletion, low crop yields and the effects of climate change.
• Export bans from other Asian countries have led China to tap the U.S. as a viable source of rice importation. Although talk of trade deficits and a potential steel tariff are also at issue between the two countries, the rice agreement is considered a step toward establishing positive relations.

Dive Insight:

The deal to open market access for U.S. rice exporters is a major victory for the Trump administration. As the largest market for rice and a still-booming population, today's deal could boost U.S. exports to China in the long-run. In turn, this would help reach the President's goal of reducing the U.S. trade deficit.

Securing market access is just the first step, however. Now, rice exporters will have to convince Chinese importers to prioritize their product over other major rice producers from more proximate countries including India, Indonesia, Japan and Thailand. Exporters will face the logistical challenges of greater lead times and transportation costs, which may be not be feasible to pass on to buyers.

It is a welcome challenge, however, and U.S. grain exporters and transportation providers are likely celebrating. The rail industry will welcome a potential increase in demand for carload shipments, particularly as carriers and ports invest in greater port infrastructure. Overall, the trade deal is good news for supply chains, as it also shows a rise in good faith between the economically competitive countries.