China is the world’s largest importer of soybeans, and purchases almost two-thirds of all US soybean exports. The proposed tariffs could cut exports by almost 70% and lead to over $3 billion in economic losses.
The tariffs are still just a proposal, but the threat sent soybean futures tumbling.
“Soybean futures are already down nearly 40 cents a bushel as of this morning. At a projected 2018 crop of 4.3 billion bushels, soybean farmers lost $1.72 billion in value for our crop this morning alone. That’s real money lost for farmers, and it is entirely preventable,” said ASA President and Iowa farmer John Heisdorffer.
The ASA expressed its frustration with a potential escalation of a trade war with China, and called on the White House to reconsider the tariffs that led to this retaliation.
“It should surprise no one that China immediately retaliated against our most important exports, including soybeans,” said Heisdorffer. “We have been warning the administration and members of Congress that this would happen since the prospect for tariffs was raised. That unfortunately doesn’t lend any comfort to the hundreds of thousands of soybean farmers who will be affected by these tariffs. This is no longer a hypothetical, and a 25% tariff on U.S. soybeans into China will have a devastating effect on every soybean farmer in America.”
Heisdorffer added: “We regret that the administration has been unable to counter China’s policies on intellectual property and information technology in a way that does not require the use of tariffs. We still have not heard a response from the administration to our March 12 letter requesting to meet with President Trump and discuss how the administration can work with soybean farmers and others in agriculture to find ways to reduce our trade deficit by increasing competitiveness rather than erecting barriers to foreign markets.
“But there is still time to reverse this damage, and the administration can still deliver for farmers by withdrawing the tariffs that caused this retaliation. China has said that its 25% tariff will only go into effect based on the course of action the administration takes. We call on President Trump to engage the Chinese in a constructive manner—not a punitive one—and achieve a positive result for soybean farmers,” said Heisdorffer.
The administration has moved to soothe fears, with US Secretary of Agriculture Sonny Perdue telling reporters during a news conference: “I talked to the President [...] and he said, ‘Sonny, you can assure your farmers out there that we’re not going to allow them to be the casualties if this trade dispute escalates.’”, according to Reuters.
China leads the world field for soybean imports. According to a Purdue University study, the country bought 93 million metric tons in 2016, primarily from the U.S., Brazil and Argentina
The Purdue study also estimated that a 10% tariff on US soybeans could cause:
- US soybean exports to China to fall by 33%
- Total US soybean exports to decrease by 18%
- Total US soybean production to decrease by 8%
A 30% tariff on US soybeans could cause:
- US soybean exports to China to fall by 71%
- Total US soybean exports to decrease by 40%
- Total US soybean production to decrease by 17%