On Wednesday, the Trump administration turned a weekend threat into a promise of sharply higher tariffs on Chinese products and Beijing declared it would take the “necessary countermeasures” — all on the day before ministerial-level talks to resolve the Sino-U.S. trade war were set to resume. Soybeans are the chief agricultural casualty in the dispute that is undermining U.S. farm exports.
President Trump said on social media that China was prolonging the trade war in hopes he would lose re-election in 2020. “China has just informed us that they (Vice-Premier) are now coming to the U.S. to make a deal. We’ll see,” tweeted the president, saying tariffs are “great for U.S., not good for China!”
In a Federal Register notice, the U.S. trade representative’s office said, “China has chosen to retreat from specific commitments agreed to in earlier rounds,” so duties on $200 billion worth of Chinese products would rise to 25 percent on Friday, from the 10 percent imposed in September 2018. The first round of U.S. tariffs were imposed in July 2018.
“The escalation of trade friction is not in the interests of the people of the two countries and the people of the world. The Chinese side deeply regrets that if the U.S. tariff measures are implemented, China will have to take necessary countermeasures,” said China’s Commerce Ministry.
The exchanges between the two nations dimmed hopes of an agreement this week. U.S. officials say China wanted to revise language throughout a 150-page draft written by negotiators. “The Chinese requests covered everything from agreements not to obtain American intellectual property to limiting Chinese subsidies and currency manipulation,” said the New York Times. China says it is negotiating in good faith. The administration says China is backsliding.
“This is a predicament for soy growers,” said Davie Stephens of the American Soybean Association. “We understand that Mr. Trump and his administration have broad goals they want to achieve for our country, but farmers are in a desperate situation. We need a positive resolution of this ongoing tariff dispute, not further escalation of tensions.”
The USDA forecasts that China will drop to fifth-place among export customers this year, down from No. 1, and that ag exports will decline marginally, to $141.5 billion. Soybean exports are forecast to total $18.5 billion, compared with $21.6 billion in fiscal 2018 and $23.8 billion in fiscal 2017. The USDA is scheduled to update its export estimates on May 30.
In the past, China bought 1 of every 3 bushels of the U.S. soybean crop. In the wake of the trade war, it has ramped up purchases from South America. U.S. exporters have been seeking alternative markets, but it is hard to replace China, the world’s largest soybean importer.