Midnight Eastern Time on Friday marked the moment the administration’s tariffs on Chinese imports went into effect. As promised, Beijing hastily reiterated with duties on $34 billion worth of U.S. goods.
China’s reciprocal tariffs took an aim at soybeans, which accounted for $14 billion of U.S. exports into the Asian country last year, the Wall Street Journal reported. The crop represents some 41 percent of the value of products on the Chinese retaliatory list.
The tit-for-tat trade showdown has already impacted soybeans farmers in the Midwest.
“Soybeans are the top agriculture export for the United States, and China is the top market for purchasing those exports,” said John Heisdorffer, president of the American Soybean Association (ASA), in a statement. “The math is simple. You tax soybean exports at 25 percent, and you have serious damage to U.S. farmers.”
Since 1996, when the U.S. exported only $414 million worth of soy to China, the crop has sprouted an exponential growth in trade. In 2017, nearly one in every three rows of harvested beans shipped to China.
Experts expect China to drive the global soybean demand in the next 10 years, which underscores the significance of the market for U.S. soy growers.
Prior to the tariffs imposition, ASA urged President Trump to consider disparate approaches to reduce the country’s trade deficit with China. It also organized a lobbying effort in Congress, but to no avail. “In a last-ditch social media effort,” some soy farmers posted images of themselves and their families on social media, appealing to the president to correct his trade course.
“This could not be happening at a worse time for U.S. farmers and ranchers,” Michele Aavang, an Illinois soy farmer and Farm Bureau member, told NBC News in an email.
The U.S. is still negotiating trade arrangements with Mexico, which is the second largest soy consumer after China. In mid-June, Mexico warned it could strike $4 billion worth of U.S. corn and soy imports if President Trump imposes new tariffs, Reuters reported.
Mexico is also studying how to reduce the economic strain of an escalating trade spat, an action that China has also adopted. Several large Chinese soy buyers have switched to rapeseed meal, an alternative to soy in the production of animal feed. Companies are also including exit clauses in their purchase contracts with U.S. suppliers, Reuters reported in March.
What sparks most worries is that China has shifted its focus to Russia by almost tripling soybean purchases from its northern neighbor. Russia has sold China nearly 850,000 metric tons of soybeans – a historic record – since last July and through May of this year, Bloomberg reported.
Russia’s soybean fields in the far east, the agriculture region nearest to China, could grow by as much as 20 percent in the next three years, Daniil Khotko, an analyst at Moscow’s Institute for Agricultural Market Studies, told Bloomberg. Together with imports from Brazil, this could offer China a new and long-term supply of soy, pushing U.S. producers to the sidelines.