Potential US tariffs on Canada and Mexico have been pushed back until March but China was hit Tuesday as planned.
The 10% tariff on Chinese imports imposed by American President Donald Trump went into effect earlier today, targeting an estimated $450 billion in Chinese goods. However, China’s response was relatively muted, with reports that Beijing has retaliated with a 15% tax on certain types of coal and liquefied natural gas and a 10% tariff on crude oil, agricultural machinery, large-displacement cars and pickup trucks.
All told, the Chinese measures, which take effect Feb. 10, targeted only about $20 billion worth of American goods. Soybeans and other US agricultural commodities were not among the goods that China plans to tariff.
The stakes were high, as a joint study commissioned by the American Soybean Association and the National Corn Growers last year found that US soybean farmers could potentially lose an average of $3.6 to $5.9 billion in annual production value while US corn farmers stood to lose an average of $900 million to $1.4 billion in annual production value, depending on how China would responded to increased U.S. tariffs.
The US-China trade war during Trump’s first term as president had a significant impact on the soybean market. As the largest importer of US soybeans, China’s 25% tariff led to a sharp decline in US exports to China, causing soybean prices to plummet. The trade war also encouraged China to seek alternative sources and boost domestic production, reducing its reliance on US soybeans even after partial trade agreements. Although the Phase One trade deal in early 2020 temporarily boosted US exports to China, the market remained volatile due to geopolitical tensions and changing global supply chains.
