Trade war: China plans to slap sanctions on US soybeans, industry facing serious losses
05 Apr 2018 --- China has seriously upped the severity of its sanctions against the US as the trade war between the world's two largest economies escalates. US soybeans are now being targeted for 25 percent retaliatory tariffs, after initially not including the commodity on its list of items impacted. As the trade war between the two countries intensifies, China has added soybeans to a long list of food products that will be subject to tariffs alongside frozen pork, almonds, pistachios, wine and fresh and dried fruit.
And leading purchaser, processor and transporter of soybeans in major supply chains around the world, Cargill has told FoodIngredientsFirst how damaging a trade conflict between the two world economies could be.
“We are deeply concerned over the escalated trade tensions between the United States and China. These two countries are linked, with China being the second largest market for US food and agricultural exports. We urge both countries to get to the negotiating table to constructively address their concerns with each other in a time-bound manner,” a Cargill spokesperson said.
“The world is interdependent and the cost of trade wars is too high, with a negative impact on the global economy. Open trade has allowed economies to reach across borders to obtain goods, services and capital supporting the farm economy and providing access to safe, affordable food.”
“The impact of trade conflict between the world’s two largest economies could lead to a destructive trade war with serious consequences for economic growth and job creation. There are no winners in a global trade war.”
International soybean exporter Bunge declined FoodIngredientsFirst’s request for comment.
The rhetoric coming from China seems to have stepped up as the country fights back against President Trump’s previous tariffs on steel and aluminum which signaled the start of this trade conflict that will now seriously impact American farmers and the US$14 billion soybean trade.
The move by Beijing also follows President Trump threatening more duties on more than 1,300 imported products in China's machinery, electronics, aerospace and robotics sectors.
And as US farmers face significant struggles, China warns it will not stop there and could expand its list of sanctions to include other US farm commodities.
The American Soybean Association (ASA) is calling on the White House to reconsider the tariffs that led to this retaliation, expressing its extreme frustration about the escalation of a trade war with the largest customer of US soybeans.
China purchases 61 percent of total US soybean exports, and more than 30 percent of overall US soybean production.
“It should surprise no one that China immediately retaliated against our most important exports, including soybeans. We have been warning the administration and members of Congress that this would happen since the prospect for tariffs was raised,” said ASA President and Iowa farmer John Heisdorffer.
“That, unfortunately, doesn’t lend any comfort to the hundreds of thousands of soybean farmers who will be affected by these tariffs. This is no longer a hypothetical, and a 25 percent tariff on US soybeans into China will have a devastating effect on every soybean farmer in America.”
Soybean futures were already down nearly 40 cents a bushel as of yesterday (April 4), according to Heisdorffer and at a projected 2018 crop of 4.3 billion bushels, soybean farmers lost US$1.72 billion in value for the crop yesterday morning alone.
“That’s real money lost for farmers, and it is entirely preventable,” he adds.
“We regret that the administration has been unable to counter China’s policies on intellectual property and information technology in a way that does not require the use of tariffs.”
The ASA has already requested to be part of discussions with the Trump administration in a bid to reduce the trade deficit by increasing competitiveness rather than erecting barriers to foreign markets. However, the association has not heard back from government officials.
However, there is still time to reverse the damage and the US administration can still deliver for farmers by withdrawing the tariffs that caused this retaliation, says Heisdorffer.
“China has said that its 25 percent tariff will only go into effect based on the course of action the administration takes. We call on President Trump to engage the Chinese in a constructive manner – not a punitive one – and achieve a positive result for soybean farmers.”
By Gaynor Selby
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