US feed industry, soybean trade frustrated over tit-for-tat trade war

By Aerin Einstein-Curtis contact

- Last updated on GMT

© GettyImages/William_Potter
© GettyImages/William_Potter

Related tags: Trade, China

The US feed industry calls for a resolution to the trade war with Beijing as Washington points to the possibility of new or increased tariffs on products.

Renewed calls for a trade deal to be reached between the two countries were made Monday [May 6] by feed industry representatives, including the American Feed Industry Association (AFIA) and the American Soybean Association (ASA), following a series of public comments from US President, Donald Trump, about the possibility of imposing new tariffs on China.

In a series of tweets, the president had indicated that a 10% levy placed on $200bn in goods from China is potentially set to be increased to a 25% tariff on Friday.

The increase​ in tariffs was initially set to take place in January but was delayed following the start of trade talks.

The hike was later confirmed by US trade representative, Robert Lighthizer and treasury secretary, Steven Mnuchin, as reported by Business Insider.​  

The president’s statements also indicated that an additional $325bn in Chinese imports, which currently do not face any levies, will see an added tariff of 25%. It was not clear when that tariff would be put in place.

The announcements came during a period of ongoing trade negotiations between the two countries that were reported to be nearing a conclusion.

US officials said China backtracked on substantial commitments it made during trade talks with the US, triggering the US retaliatory tariff action. 

The ASA said that a resolution to the trade negotiations between the two countries would provide a way for soybean producers to make informed decisions going forward especially as planting continues, Davie Stevens, president of the ASA, told us.

"We urge the administration to wind this up."

Gina Tumbarello, director of international policy and trade, AFIA, said the trade group "strongly urges the Trump administration to seek alternative means for reaching an amicable negotiation with China – one that does not further diminish the US animal food industry’s role in this crucial marketplace or result in increased costs for American farmers, ranchers and pet owners."

Tariffs and feed trade

The US initially put a series of tariffs​ on Chinese products followed by a series of back-and-forth tariffs exchanges. The process included tariffs​ being placed on US soybeans and other feed products.

In 2017, China imported about 60% of the soybean crop exported by the US and about 31% of the total US crop, according to information from the ASA.

Stevens said recent purchases​ of US soybeans by China, previously their top export market, have not brought sales back to their previous levels, he said. “It is not evening out – we need to have a free, open market.”​ 

Similarly, corn producers were anticipated to see a drop by $0.44 per bushel on their crop in 2018 and $0.35 a bushel for the 2017 crop sold after June 1, 2018, linked to trade disputes, according to an economic analysis done for the National Corn Growers Association. In total, the estimate is that producers face a loss of $6.3bn for 2018 and $1.2bn in 2017.

The retaliatory tariffs placed on US products by China have accounted for a reduction in exports of about 5.9%, said Tumbarello.

“This does not even account for the ongoing strain US animal food manufacturers have been feeling for years due to a number of unscientific regulatory barriers China has in place that restrict US goods."

“Continuing to engage in a tit-for-tat trade war is allowing other countries the opportunity to lead in this lucrative market while turning the attention away from addressing real market access issues that restrict some of the safest and highest quality animal food products from reaching Chinese producers and pet owners."

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