U.S. and China Stumbling Into Trade War

As expected based off recent events, the U.S. and China are headed for a trade war at the cost of U.S. farmers. China has included soybeans in its latest proposed retaliatory tariffs, following other ag products such as pork and ethanol. Those all stem from the Trump administrations tariffs on steel and aluminum imports to the United States, and others proposed this week. The American Soybean Association expressed "extreme frustration" regarding the escalation of a trade war as China is proposing a 25 percent tariff on U.S. soybeans. ASA called on President Trump to withdraw the tariffs that caused the retaliation and engage with China in a :constructive manner." American Farm Bureau Federation President Zippy Duvall says the tariffs are "testing both the patience and optimism of families who are facing the worst agricultural economy in 16 years," adding this has to stop." China purchases 61 percent of total U.S. soybean exports, and more than 30 percent of overall U.S. soybean production.

Farmers Union says farmers need compensation
The National Farmers Union says the Trump administration needs a plan to help farmers through a trade war. With the latest tariff proposal including $50 billion of U.S. goods, including soybeans, corn, beef, and other agricultural products, NFU President Roger Johnson expressed concern there is not a plan in place to protect farmers. Farmers are dealing with depressed farm prices and a 12-year low in farm income, and a trade war will undoubtedly make these conditions worse, according to Johnson. NFU is urging the President to engage with Congress to develop a farm bill that will protect farmers and ranchers from the collateral damage caused by the developing trade war. Agriculture Secretary Sonny Perdue, who is traveling this we ek, said a plan is in the works, but so far has not provided any details.

Bower: Keep China tariff in perspective
No one has officially declared war in the way of trade between the U.S. and China, but the nations are no doubt in the makings of a trade war. President Donald Trump insisted that we are not in a trade war with China. However, China fired back a proposed list of tariffs less than 24 hours after the Trump administration rolled out a tariff proposal against China. While the proposal from China includes a 25 percent tariff on soybeans, market experts say its important to keep the soybean market in perspective. In a daily newsletter, Jim Bower of Bower Trading points out the phrase "do what China does, not what they say." The latest tariffs by President Trump and China are not yet set in stone. Trump will seek comments on his proposal for 30 days, and China allows 180 days for negotiations before implementing the latest proposal. That time allows a chance for both nations to negotiate an agreement if desired. Bower, in his daily newsletter, points out that Brazil, another major source of soybeans, does not have enough of the commodity to fully supply China. And, the only major soybean growing areas of the world are North and South America. Future demand my shift, but global demand should not decrease, overall.

Photo: AgView.net

Story source: NAFB News Service

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