Overnight, the trade wars between the U.S. and China sharply escalated, when China’s leaders communicated their seriousness to retaliate against tariffs announced by President Trump by targeting 106 U.S. products, including one in particular that will directly harm regular Chinese citizens: soybeans.
China will struggle to replace U.S. soybean supplies after implementing an additional 25 percent tariff on American shipments, likely inflicting severe financial pain on domestic companies, analysts and executives at feedmakers said.
The world’s top importer of the oilseed will impose the tariffs on soybeans and 105 other U.S. products, state broadcaster CCTV said on Wednesday, an expected retaliation following Washington’s aggressive trade actions.
Soybeans are considered one of the most powerful weapons in Beijing’s trade arsenal because a drop in exports to China would hurt Iowa and other farm states that backed U.S. President Donald Trump. Soybeans were the biggest U.S. agricultural export to China last year at a value of $12 billion.
The following chart shows the annual value of soybeans shipped by the U.S. to China over the six-year period from 2012 through 2017, as reported by the U.S. Census Bureau through its USA Trade Online site.
The next chart converts those billions of dollars into their equivalent billions of bushels based on the prices of soybeans from 2012 through 2017. If it looks familiar, we featured it earlier this year when we examined the dark side of success for U.S. soybean exports.
China’s inclusion of soybeans in its list of U.S. products targeted for retaliation in the escalating trade war between the two nations is highly significant in that this single agricultural product dominates all other U.S. farm exports to China.
Beyond that, it is also highly significant because China’s people would feel the pain from its leaders proposed tariff on U.S. soybeans.