Soybeans trade likely to become China’s first retaliation to U.S. tariffs: expert

Experts say China is likely to adopt measures on soybean imports from the U.S. as its first move in retaliation to the latter’s increasing tariffs on imports from China, reported on March 22.

China’s market receives the largest number of US planes and soybeans. Statistics show that 62% of US soybeans ended up in China. On the other hand, what China exports to the US is mostly something they have no comparative advantage in making or do not make at all, said Hua Chunying, spokesperson for the Ministry of Foreign Affairs, during a press briefing on Wednesday.

The US is on the one hand urging China to buy what it wants to sell, while refusing to sell what China wants to buy, Hua noted.

She called on the two sides to calm down and have constructive dialogues and consultations in the spirit of equality, and furthermore to consider mutual benefits and mutual respect for the purpose of seeking out a win-win solution.

The U.S. President Donald Trump signed on Thursday a memorandum that could impose tariffs on up to 60 billion U.S. dollars of imports from China, despite strong warnings from business groups and trade experts.

The American Soybean Association (ASA) expressed concerns about a potential trade war that may inflict heavy losses on the U.S. soybean industry following the U.S. decision to hike tariffs on China’s steel and aluminum imports, the Financial Times reported.

ASA President John Heisdorffer noted that China is the largest buyer of U.S. soybeans in the world. Global competitors in the soybean industry like Brazil and Argentina will be alternatives for China. Also, the potential tariffs would bring US soybean growers a tough life.

ASA’s worry is not groundless. Nearly 62 percent of U.S. soybeans are exported to China, indicating the U.S. soybean industry will be greatly impaired if China sets a trade barrier on soybeans imported from the U.S.

Moreover, soybeans from the U.S. are not irreplaceable to China, as China has been strengthening cooperation with big soybean exporters in South America.

For example, China recently increased its purchasing volume of soybeans in Brazil.

Chi Jingtao, CEO of COFCO, China’s leading foodstuffs conglomerate, noted that the company is to raise its purchasing amount of soybeans from 4 to 7.2 million tons from Mato Grosso each year, according to Reuters in November 2017. The Chinese enterprise is also planning to invest $459 million to build 30 grain barns in Brazil.

In addition, Chinese enterprises are helping Brazil with infrastructure construction to help the country improve its export capability of soybeans.