US and China: from trade tiff to trade war?

By Aerin Einstein-Curtis contact

- Last updated on GMT

©GettyImages/ cbies
©GettyImages/ cbies
Several US feed crop producer organization are expecting to see damage to the export market with China, as 25% import tariffs start.

The imposition of tariffs​ on several US feed grains including corn, soybeans, wheat and sorghum along with other agricultural products​ came after the US imposed 25% tariffs on $34bn in goods coming from China. US duties took effect Friday [July 6] morning.

The Chinese Ministry of Commerce said​ that the US is in violation of World Trade Organization rules and is starting the “largest trade war in economic history”​ and added that the tariffs on Chinese goods amount to “trade bullyingism.”​ In addition to tariffs, China also filed a lawsuit​ against the US with the WTO.

The new tariffs​ were initially proposed as a way to address findings from a Section 301 investigation regarding China’s practices involving technology transfer, intellectual property and innovation, according to the Office of the US Trade Representative.

China announced the start of its retaliatory 25% tariffs on $34bn in goods from the US on Friday, with the potential to add tariffs to an additional 114 products if the US implements an additional set of tariffs, according to the Chinese Ministry of Finance.

Export math

The US Grains Council said that it is watching to see what results would stem from the newly applied tariffs from both countries.

“The tariffs imposed today by the US and China have been pending for some time and their impact will become fully clear in the coming days and weeks,”​ the council told us in a statement. “While we monitor the ramifications these actions have on our global trading relationships and our members, our global staff is also fully ramped up to be seeking new markets for US grains and their related products.”

Previously, the council said that it was focusing on both supporting current markets and developing new areas for US feed grains.

The American Soybean Association (ASA) added that soybean producers rely on the ability to export to China.

In 2017, the US exported about 31% of its crop to China – or about one of every three rows of soybeans grown, the association said. The value of the market increased from $414m in 1996 to $14bn by 2017.

Prices for soybeans in the US have dropped $2 a bushel since the start of tariffs discussion in March, the association added.

“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. “The math is simple. You tax soybean exports at 25%, and you have serious damage to US farmers.”

The ASA also has called for the administration to find other means to address a trade deficit with China.

The National Sorghum Producers echoed some of the ASA points and said that its members are continuing to monitor the tariff situation and encouraging trade officials to develop long-term trade arrangements with China.

Sorghum producers have already seen the market uncertainty and price volatility that take place when the market to China is disrupted, the organization said.

“We understand the grave impact tariff decisions can inflict on producers,” ​said Don Bloss, chairman with the National Sorghum Producers, previously. “American farmers depend on trade with China, and these tariffs will have devastating effects on US agriculture. We greatly value our business relationship with Chinese buyers and hope to see this win-win relationship move forward.”  

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