The trade battle between the U.S. and China has taken a turn for the worse for farmers and ranchers in the U.S. in the past four days. On the heels of President Donald Trump announcing the U.S. would impose a 10 per cent tariff on the final US$300 billion of untouched imports from China on September 1, the Asian nation raised the stakes.
News broke on Monday that China says it will stop buying all U.S. agriculture products, as reaction to the new tariffs imposed by the U.S. China’s President Xi has asked state-run buyers to curb their purchases of agricultural products from the United States.
Trump had cited the lack of Chinese buying as the reason for the new tariffs announced last week. American agricultural exports to China have been involved in a real “he said/he said” with neither side on the same page as the other over the last year.
BREAKING: American Farm Bureau Federation President Zippy Duvall: “China’s announcement that it will not buy any agricultural products from the United States is a body blow to thousands of farmers and ranchers who are already struggling to get by.”
— Mike Dorning (@MikeDorning) August 5, 2019
Canadian farmers have been touched by China’s cold hand themselves but this Chinese announcement is an all encompassing decision and not specific commodities like Canada has experienced.
Traders will watch very closely to see if China actually follows through with the promise and increase their reliance on South American agricultural commodities.
Soybeans were virtually flat on the futures market while U.S. equities suffered more than a 760 point loss in the Dow Jones Industrial Average, the largest down day of 2019.