Trump comments on China tariff continuation worry US soy growers
The American Soybean Association (ASA) is unhappy with recent comments from US President Donald Trump that he could leave tariffs in place under an agreement with China.
The American Soybean Association (ASA) is unhappy with recent comments from US President Donald Trump that he could leave tariffs in place under an agreement with China. The President commented last week that tariffs on China could remain in place for an extended period even if a deal is reached. But the ASA says that it has always considered the lifting of the Section 301 tariffs by the US in exchange for China removing its retaliatory 25% tariff on US soybean imports as essential to any initial agreement between the two countries.
The tariff dispute between the countries began last July when the US imposed a 25% tariff on $34 billion of imports from China, which Beijing matched with tariffs of its own, including on US soybeans. The US imposed tariffs in three tranches. The third tranche in September impacted the pesticide industry in both countries when the US imposed 10% tariffs on $200 billion worth of Chinese goods. They included a long list of pesticide active ingredients and chemicals used by US manufacturers. The tariffs were to be increased to 25% after December 31st, but that was averted following a meeting in early December between President Trump and Chinese President Xi Jinping. The meeting resulted in the US postponing the tariff escalation by 90 days in exchange for China promising to purchase a “very substantial, amount of agricultural, energy, industrial, and other products from the US to reduce the trade imbalance between our two countries”.
The ASA says that it is has not been enough for China to make one-off “goodwill” purchases of US soybeans. Any longer-term plan to “manage” soybean trade under which China would guarantee to buy specified amounts of soybeans over an extended period of months or years—but still keep its 25% tariff in place—is not an acceptable alternative to full market access.
Soybean farmers continue to suffer from restricted access to China, by far the industry’s most important foreign customer, the ASA points out. The value of US soybean exports to China has grown exponentially over the past 20 years, from $414 million in 1996 to $14 billion in 2017. China imported 31% of US production in 2017, equal to 60% of total US exports and nearly one in every three rows of harvested beans. Over the next ten years, Chinese demand for soybeans is expected to account for most of the growth in global soybean trade, making it a prime market for the US and other countries.
With depressed prices and unsold stocks forecast to double before the 2019 harvest begins in September, producers need China reopened to US soybean exports within weeks, not months or even longer, the ASA says. Any agreement reached between the countries that does not include removal of China’s 25% tariff on US soybeans would not be acceptable to US soybean farmers, it adds.According to the USDA’s March forecast, the soybean area is estimated to drop this year by 5.1% to 84.6 million acres. The two largest soybean-growing states, Illinois and Iowa, are expected to see decreases of 2.8% and 6%, respectively.