China has played one of its ”Trump” cards and is threatening to impose a 25 percent tariff on U.S. soybeans.
The proposal came only hours after the United States released a list of 1,300 Chinese goods and products that could potentially face tariffs. This includes imports of flat screen televisions, clothing, toys and aircraft parts.
U.S. President Trump says the tariffs are meant to punish China for breaking global trading rules and misappropriating American intellectual property. The Chinese government denies the allegations.
Soybean futures fell 21 cents a bushel on Wednesday as farmers worry about the future of sales with its largest soybean customer. U.S. soybean sales in 2017 were in the neighborhood of $14 billion.
“Even though these tariffs are not in place (yet), it is affecting futures markets,” says Chris Clayton, agriculture policy editor with DTN-The Progressive Farmer. “It is very nerve wracking right now as farmers are going to banks to shore up their loans for planting season.”
The American Soybean Association (ASA) says the prospect of Chinese tariffs comes as no surprise.
“This is no longer a hypothetical, and a 25 percent tariff on U.S. soybeans into China will have a devastating effect on every soybean farmers in America,” said ASA president John Heisdorffer.
Iowa Senator Charles Grassley says the United States needs to protect its intellectual property and competitiveness, but shouldn’t force farmers and ranchers to bear the brunt of retaliation for the entire country.”
The ‘get tough on China’ trade policy is not welcomed by farmers, but it could be playing well to President Trump’s voter base. Opinion polls have shown modest improvements in his approval ratings.
“There is a strong element of the American population that is isolationist or America first,” says Neil Townsend, a senior marketing analyst with FarmLink Marketing Solutions. “I just worry that this will strengthen the resolve of the people around the President that they are on the right path.”
Townsend says there are indications that the United States is willing to move forward on the North American Free Trade Agreement (NAFTA), which is currently being renegotiated.
“The United States needs NAFTA and as long as there is some clearheaded thinking down there, I think there will be a resolution on NAFTA.”
David McNaughton, Canada’s ambassador to the United States, says he’s pleased with a positive tone now coming out of NAFTA talks.