It’s getting easier to say that the U.S. and China are engaged in an all-out trade war.
It has definitely been a frosty end to the week as the U.S. confirmed on Friday that it plans to add roughly $50 billion in trade tariffs under Section 301 on certain Chinese goods effective July 6. The White House made it clear that the action was a response to “unfair trading practices and theft of U.S. intellectual property and technology.”
Even before the U.S. tariffs were confirmed, President Trump said that if China retaliated the U.S. would up the anti to $100 billion.
By day’s end, China had called President Trump’s bluff and confirmed its retaliation with $50 billion in tariff of its own, also effective July 6th.
The list of goods that would be impacted by the Chinese tariffs include soybeans, corn, wheat, cotton, rice, sorghum, beef, pork, poultry, fish, dairy products, nuts and vegetables.
Statement from China: “We will implement tariffs on the same-scale and at the same level of strength against the US immediately. All previously agreed trade negotiation results are no longer valid.”
— Beatriz Cao (@Bea_Cao) June 15, 2018
Some in the U.S. agriculture community are giving the president the benefit of the doubt, but not everyone is.
Alan Kemper, past president of American Soybean Association and National Corn Growers Association and trade adviser to the USDA and USTR, tweeted:
It is time to put the President on notice. The trade war he has started with China Mexico and Canada will put the US in a recession. Agriculture will be the first to go, including force farm sales, and farmers committing suicides. Other rural industries to follow
— ALAN (@kfarm275) June 15, 2018
The tariff tit for tat is certainly counter to the belief the relationship between the U.S. and China was improving. It’s also clear today that President Trump’s boasts about a trade deal back in May were slightly premature.
Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce.
— Donald J. Trump (@realDonaldTrump) May 21, 2018
“Since these tariffs will not take effect until July 6th, it gives the U.S. and Chinese negotiators time to come to some sort of agreement that will kick those tariffs away,” noted Jim Wiesemeyer, Washington Analyst with ProFarmer on Agritalk on Friday,
The performance of November soybeans has not been stellar in the past week or month or three months.
Some traders believe that the drop in soybeans has more to do with fair weather and improved crop conditions, but ignoring the impact of a trade war could prove dangerous.
U.S. based agricultural trade advocacy group Farmers for Free Trade tweeted on Friday that, “Soybean exports to China could drop by a whopping 65 percent if China imposes a 25 percent tariff on U.S. soybeans.”
Farmers and market traders will be watching whether President Trump follows through on his threat to impose an additional $100 billion in tariffs as promised.