In an escalation of the Sino-U.S. trade war, Chinese companies halted purchases of U.S. farm exports on Monday in response to President Trump’s announcement of higher tariffs on Chinese goods. The largest U.S. farm group said China’s actions were “a body blow to thousands of farmers and ranchers who are struggling to get by.”
Meanwhile, the Chinese commodity trader Cofco said it plans to increase its purchases of Brazilian soybeans by 5 percent annually over the next five years, reported Reuters. Brazil is the world’s largest soybean grower and exporter. China, the world’s largest soy importer, stepped up its purchases of Brazilian beans after putting steep retaliatory tariffs on U.S. farm goods. Cofco says it will expand its investments in Brazil in the near term.
“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,” said president Zippy Duvall of the American Farm Bureau Federation. “In the last 18 months alone, farm and ranch families have dealt with plunging commodity prices, awful weather and tariffs higher than we have seen in decades. We urge negotiators to redouble their efforts to arrive at an agreement, and quickly.”
“This is just another nail in the coffin,” Tyler Stafslien, a North Dakota-based soybean farmer, told Yahoo Finance. “To see this thing only seems to be getting worse rather than better is very concerning, and the American taxpayers may have to foot another round of funding if this keeps up — or we could see a ton of farmers’ loss throughout this nation.”
China’s Commerce Ministry announced the shut-off of purchases in response to President Trump’s announcement last week of 10 percent duties on an additional $300 billion of Chinese products. The ministry said the tariffs were “a serious violation of the consensus” between Trump and President Xi Jinping in June fore a cease-fire in the trade war, reported CNN. In a statement, the ministry said the State Council Customs Tariff Commission “will no longer rule out levying import duties on U.S. agricultural products purchased after Aug. 3.”
China had offered to waive its tariffs for some good-will purchases of U.S. good. “Based on what I know, in view of new tariff threat by the U.S. side, the Chinese side has decided to suspend tariff exemption for U.S. farms goods and Chinese enterprises have halted buying U.S. farm products,” said editor Hu Xijin of the Global Times newspaper on social media. “The Chinese side won’t submit to the U.S.”
Beijing also let its currency slide against the dollar, leading the Treasury Department to formally declare China a currency manipulator. In response to the mounting trade war, Wall Street stocks fell nearly 3 percent.