Tag Archives: China

China could ratchet up its trade war tactics against the United States as President Donald Trump has escalated the trade war between the two nations this week.

Politico points out that China knows how to fight a trade war and could go beyond retaliatory tariffs next. China has been known to successfully encourage its 1.4 billion population to give up products from targeted countries, such as Big Macs, and make business harder for U.S. companies in China.

While China has far fewer U.S. imports to impose tariffs on, a trade expert told Politico: “The reality is the Chinese can do quite a bit to hurt U.S. companies in the Chinese market.” Tariffs that have yet to take effect will target U.S. agricultural products. Earlier this week, business and agriculture groups penned a letter to Congress seeking lawmakers involvement to reign in Trump’s trade agenda.

The group asked for congressional oversight, while detailing how Congress has the power to regulate foreign trade.

ST. LOUIS – In response to the announcement regarding U.S. tariffs on Chinese imports, the American Soybean Association (ASA), the U.S. Soybean Export Council (USSEC) and the United Soybean Board (USB) release the following statements.

“Nobody is a winner today,” says ASA Vice President Davie Stephens, a Kentucky soybean grower. “In the midst of a down farm economy and down farm prices, this uncertainty has led to a drop of market prices. Adding additional export market uncertainty through an expected 25 percent retaliatory tariff on U.S. soybeans into China ensures that soy growers and the rural communities that depend on them will see the effects of this for years to come. As the largest importer of U.S. soybeans, China is a vital and robust market we cannot afford to lose.”

“We know our U.S. farmers are great at producing soybeans and so do our customers; globally, consumers are demanding soy products in record volume,” says USSEC Chair Derek Haigwood, a soybean farmer from Newport, Arkansas. “USSEC is actively working to minimize the impact of this action on U.S. farmers and the U.S. Soy industry by ensuring customers around the world understand the value that U.S. Soy provides.”

“The soy checkoff continues to focus on market diversification for U.S. soybeans to improve profit potential for all U.S. soybean farmers,” says USB Chair Lewis Bainbridge, a soybean farmer from Ethan, South Dakota. “In times like these we need to keep current and potential soy users informed about the benefits of U.S. Soy.”

The U.S. Soybean Export Council connects U.S. soybean farmers with opportunities to improve human nutrition, livestock production and aquaculture. This mission is accomplished with a science-based technical foundation and a global network of partnerships including soybean farmers, exporters, agribusiness and agricultural organizations, researchers and government agencies. USSEC operates internationally and works with aquaculture programs in different nations to help ensure sustainability and profitability for industry producers. USSEC programs are partially funded by the United Soybean Board.

USB’s 73 farmer-directors work on behalf of all U.S. soybean farmers to achieve maximum value for their soy checkoff investments. These volunteers invest and leverage checkoff funds in programs and partnerships to drive soybean innovation beyond the bushel and increase preference for U.S. soy. That preference is based on U.S. soybean meal and oil quality and the sustainability of U.S. soybean farmers. As stipulated in the federal Soybean Promotion, Research and Consumer Information Act, the USDA Agricultural Marketing Service has oversight responsibilities for USB and the soy checkoff.

ASA represents all U.S. soybean farmers on domestic and international issues of importance to the soybean industry. ASA’s advocacy efforts are made possible through voluntary farmer membership by farmers in 30 states where soybeans are grown. For more information on ASA, visit www.soygrowers.com.

OMAHA (DTN) — Leaders from the American Soybean Association could only respond in dismay Friday after President Donald Trump announced he was going ahead with $34 billion in tariffs against Chinese technology products because China wasted little time Friday imposing a 25% tariff on U.S. soybeans and other agricultural products.

The Trump administration announced Friday morning that it would place a 25% tariff on goods that contain “industrially significant technologies.” These include products under China’s “Made in China 2025” strategy. The U.S. can no longer tolerate losing technology and intellectual property to unfair economic practices, the White House stated. The administration also said it was preparing tariff lines on another $16 billion in Chinese goods that would be announced later this summer.

“These tariffs are essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs,” the White House stated. “In addition, they will serve as an initial step toward bringing balance to the trade relationship between the United States and China.”

CHINA’S TARIFFS TO BE IMPOSED

Directing almost equal countermeasures, China’s Ministry of Commerce officials announced early Saturday in China that the country would impose 25% tariffs on $34 billion in U.S. products on July 6 on a range of products, including soybeans, but also products such as pork and chicken, as well as a list of non-agricultural products. Soybeans alone account for about roughly $14 billion in export value to China.

In the same vein as the U.S., China also stated it was preparing another round of 25% tariffs on $16 billion in U.S. products that would include chemicals, medical equipment and energy products.

The White House had stated Friday that the U.S. would pursue additional tariffs if China retaliates, “such as imposing new tariffs on United States goods, services, or agricultural products; raising non-tariff barriers; or taking punitive actions against American exporters or American companies operating in China.”

Even before China made its official announcement, commodity futures fell sharply for grains and oilseeds, though corn and wheat contracts rallied to reflect more modest daily losses. Soybeans, one of the largest U.S. export products to China, saw an early 21 3/4-cent drop in the July contract to $9.05 on the CME. The November contract fell 19 1/2 cents to $9.30. DTN’s National Soybean Index closed at $8.64 Thursday, priced 63 cents below the July contract and at its lowest price in 10 months.

Agriculture Secretary Sonny Perdue held a press call late Friday largely to talk about his trip to Canada, but he also got multiple questions about how USDA would respond to the Chinese tariffs and whether he was ready to tap into as much as $15 billion in Commodity Credit Corp. funds to help farmers. Perdue said it was important to see how the price situation plays out for farmers rather than looking at daily market fluctuations.

SEE HOW MARKET PRICES PLAY OUT

“You can’t demonstrate any damage on the day that tariffs are announced,” Perdue said. “We’re going to look at this very carefully. We’re going to calculate — we have been calculating market impact on a weekly basis on a number of months now, frankly … When we determine and if we determine there is legitimate and lasting market impact, based on market disruption of tariffs and retaliation, then we’re prepared to take action.”

The American Soybean Association used words such as “distraught” and “devastating” to express the group’s frustration, after the group twice sought meetings with Trump to highlight ways that boosting soybean exports to China could be part of a trade solution rather than resorting to tariffs. Instead, the group noted a “new anxiety” for soybean growers.

“As a soy grower, I depend on trade with China,” said Davie Stephens, vice president of ASA and a Kentucky farmer. “China imports roughly 60% of total U.S. soybean exports, representing nearly one in three rows of harvested soybeans. This is a vital and robust market that soy growers have spent over 40 years building and, frankly, it’s not a market U.S. soybean farmers can afford to lose.”

FARM BUREAU ANALYSIS

The Nebraska Farm Bureau stated its own preliminary analysis showed in 2016 that China added $2.29 per bushel of soybeans for Nebraska farmers, as well as $3.82 per head of pork and $26.36 for beef, just based on hides and skins value. On a per farm basis, China trade added an average of $16,600 per farm in Nebraska, though the value was much higher in some counties.

“While the entirety of the U.S.-China trading relationship won’t disappear overnight, these actions will have significant consequences, which have the potential to greatly damage farm and ranch families for years to come,” said Steve Nelson, president of the Nebraska Farm Bureau.

Tom Sleight, president and CEO of the U.S. Grains Council, noted that China and the U.S. have been doing this tit-for-tat since at least 2010. The U.S. has been hit with trade actions by China against sorghum, ethanol, corn and dried distillers grains. But Sleight added he is concerned tariffs will continue to open markets to other competitors at the expense of U.S. farmers. “Bottom line: Tariff battles are never productive.”

ALARM SOUNDED

Tom Donohue, president and CEO of the U.S. Chamber of Commerce, criticized the White House action in a statement, saying the Chamber has sought to sound the alarm against such actions.

“Imposing tariffs places the cost of China’s unfair trade practices squarely on the shoulders of American consumers, manufacturers, farmers, and ranchers,” Donohue said. “This is not the right approach.”

The U.S. tariffs were added to more than 1,300 tariff lines of products made in China, most of which will go into effect on July 6. The main tariff line of products, valued at roughly $34 billion, involved industries such as aerospace, information technology, robotics, industrial machinery, new materials and automobiles. Another set of products, valued at $16 billion, will undergo review and public comments before tariffs would be issued on those as well.

The Association of Equipment Manufacturers said Friday the tariffs jeopardized the industry because China constructs different types of construction and agricultural equipment. The tariffs affect U.S. companies importing equipment that is added to U.S. machinery.

“Given depressed U.S. farm incomes, the move is expected to disproportionately hurt America’s rural economy,” the group stated.

TAX ON LIVELIHOODS

Brian Kuehl, executive director of Farmers for Free Trade, a group set up to tout NAFTA and avoid trade disruption, said the White House move is “downright scary. It’s no longer a negotiating tactic, it’s a tax on their livelihoods. Within days, soybean, corn, wheat and other American farmers are likely to be hit with retaliatory tariffs of up to 25% on exports that keep their operations afloat. When they do, they’re not going to remain silent.”

Kuehl added that the tariffs are not only a loss for U.S. farmers, but a win for U.S. export competitors. “When American soybeans and corn become more expensive, South America wins. When beef becomes more expensive, Australia wins,” Kuehl said. “As this trade war drags on, farmers will rightly question why our competitors are winning while we’re losing.”

Ohio State University released a report Wednesday stating farmers in that state “could lose more than half of his or her annual net income” due to Chinese tariffs.

Farmers for Free Trade Executive Director Brian Kuehl  says the Trump Administration’s approval of $50 billion worth of imported goods from China is “scary.” The tariffs on Chinese imports will result in heavy retaliatory tariffs on U.S. agricultural exports. “For American farmers, this isn’t theatrical anymore, it’s scary,” Kuehl says. “It’s no longer a negotiating tactic, it’s a tax on their livelihoods.

Within days, soybean, corn, wheat, and other American farmers to be hit with retaliatory tariffs of up to 25 percent on the exports that keep their operations afloat. When they do, they aren’t going to remain silent.” Farmers for Free Trade says these tariffs are not only a blow to U.S. farmers, it’s a win for our competitors. When American corn and soybeans become more expensive, South America wins.

When American beef becomes more expensive, Australia wins. As this trade war drags on, the group says farmers will rightly question why U.S. competitors are winning while American farmers are losing. Kuehl adds, “Farmers for Free Trade will continue to hold town hall meetings across the country this summer to ensure that farmers voices are being heard. The message will be heard loud and clear. American farmers demand that elected officials support them by ending this trade war.”

The White House announced today that it’s moving forward with 25 percent tariffs on up to $50 billion of Chinese products imported into the U.S. China responded in-kind, saying it will move swiftly to protect its interests. The speculation is Beijing will retaliate by imposing tariffs of its own on $50 billion in American exports, including agricultural products. Iowa Soybean Association President Bill Shipley of Nodaway released the following statement:

“The use of food as a weapon in trade disputes is of grave concern to Iowa and U.S. farmers. It threatens the security and stability of the people and economies of China and the United States, including millions of U.S. farm families.

“There are no winners in a trade war and one that includes soybeans will not start or end well. U.S. soybean prices have already plummeted by about $1 per bushel since the beginning of June. Prices will likely drop further should the tariffs be imposed. This will further pressure agricultural families and businesses already struggling with below break-even commodity prices. Duties on imported soybeans will also negatively impact China’s soy processors, animal and aquaculture producers and its people.

“An ongoing trade dispute with China risks stoking anti-Americanism sentiment that could jeopardize the strength of trade relations between the two countries that have taken U.S. soybean farmers nearly 35 years to develop.

“Iowa soybean farmers recognize the legitimate trade issues involving China and the U.S. We’re also keenly aware of the trade imbalance that exists between the two countries. China consumes nearly 62 percent of all soybeans traded globally. Approximately 33 percent of total U.S. soybean production is destined for China, fulfilling almost 40 percent of China’s total soybean imports. Ironically, U.S. soybean and agriculture can help improve the trade imbalance by increasing sales to China. This is a much better course of action than suspending sales.

“Farmers are resilient, resourceful and used to dealing with situations out of their control. The best way to counteract negative financial impacts of tariffs is to go on offense. The Iowa Soybean Association will continue to work with partners to build demand both here and abroad, find more efficient ways to export our product and ensure policies and regulations are fair and workable for farmers.”

 

Not funded by the soybean checkoff

China says any tariffs implemented on the nation by the United States will dampen the ongoing trade talks between the two.

The Chinese government in a statement said: “All economic and trade outcomes of the talks will not take effect if the U.S. side imposes any trade sanctions including raising tariffs,” according to Politico. China stressed that the outcome of the talks should be based on “meeting each other halfway.” The comments followed last week when the Trump administration said it was ready to move forward with tariffs on $50 billion worth of Chinese goods being imported to the United States.

Meanwhile, in previous trade talks, China has agreed to buy more U.S. agricultural and energy goods. A U.S. delegation also spent two days in China last week to discuss trade issues.

Regardless whether you’re a Republican, Democrat, Libertarian or a card-carrying Mugwump, I think we can all agree that President Donald Trump is a man not afraid to change his mind. Of course, that’s not to say that everyone would characterize this unique flexibility in the same way.

What strikes some as being open-minded, hits others as being empty-headed. What speaks to some as strategic deal making, warns others of random cluelessness. What some admire as bold examples of leadership, others fear as reckless and counterproductive displays of power.

Furthermore, many members of the citizen jury flip their verdicts from morning tweet to morning tweet. Our wonderful country can often be a tough bar to manage with the head bouncer facing intractable problems on a daily basis. Reassessments can be good or bad, absolutely necessary or dangerous second-guessing.

No less a thinker than Ralph Waldo Emerson once said: “A foolish consistency is the hobgoblin of little minds.” Whatever else fans and critics might think of the commander-in-chief’s gray matter, it is clearly not haunted by ghosts of uniformity and steadfastness.

But while I’m glad President Trump is not demonically possessed by an irrational need to strictly “stay the course” for its own sake, I am increasingly troubled by the reckless way he likes to shoot from the hip in matters of global trade.

The seeds of mistrust now being sown among many of our major trading partners makes me wonder if the White House truly understands the evolutionary nature of the international marketplace, a networking process that slowly improves over time as “non-zero” relationships (i.e., net import and export sums that benefit both sides of a trade) proliferate and compound.

But if this criticism is too harsh on the Trump administration, I feel more confident in saying that the president and his entire motley crew (given the extremely short truce in the trade war with China declared just last week, it seems clear that not every team member is rowing in the same direction) could benefit from a season or two of demanding fieldwork and farm management.

As far as I’m concerned, the great and abiding ethos of agricultural marketing has always been summarized by the pledge “my word is my bond.” Many may think this sounds quaint and unrealistic. But I still think it’s the fundamental nail that guarantees 95% or more of the country’s farm business.

That’s not to say that no one in the farming and ranching community ever bothers with lawyers and contracts. Of course, successful producers follow prudent business practices. And that’s not to say that all those who work the soil or sort cattle automatically turn into unimpeachable Eagle Scouts. Bad apples fall from rural and urban orchards alike.

Nevertheless, I would have no qualms testifying before Congress (or perhaps more to the point, chatting over drinks at Mar-a-Lago) about agriculture’s extraordinarily high commitment to honor and trust in matters of commerce. Maybe I’m hopelessly naive. But I’ve seen too many unhedged farmers dutifully deliver contracted corn dollars under the spot market and too many unhedged feedlot managers accept delivery on fall calves tens of dollars above the spot market to think otherwise.

Although waves of consolidation and concentration have certainly changed some of the dynamics of agricultural business over the decades, an amazing network of trust and cooperation still exists in the country. This network’s taproot is comprised of realities such as isolation, low population, piecemeal infrastructure, and scattered markets.

The magic of this necessary trust at first fostered the rising levels of trade required to feed and energize the continental United States. This same quality of trust was then increasingly married to hundreds of other trusting business partners all around the world to create global trade worth trillions and trillions of dollars.

Unfortunately, this long-tested alchemy of trust and trade, a proven elixir responsible for the creation of untold wealth through U.S. agriculture, as well as the nation as a whole, is being threatened by a president who believes that trade wars are good and easily won.

Can’t you just hear our trading partners say something like “Anyone so casually bellicose is not to be trusted.” And that’s exactly the point. Trust and trade go together like love and marriage. Once you become less than trustworthy, your sex appeal as a trading partner quickly goes south.

During less than 18 months in office, President Trump has reneged (or threatened to renege) on U.S. international pledges too numerous to count. Some of these decisions may have been well-reasoned. But the way the president and his team blow hot and cold (sometimes on the same day), is it any wonder that U.S. creditability seems to be approaching an all-time low.

Maybe if Trump had been raised in the wilds of western Nebraska or Kansas instead of cushy New York, he would have learned one of the woodshed’s most valuable lessons: “Say what you mean, and mean what you say.”

U.S. Commerce Secretary Wilbur Ross will be in China June 2-4 for another round of talks amid trade tensions between the world’s two largest economies.

Reuters says the trade dispute got a little more complicated this week when President Donald Trump announced a national security investigation into imports of cars and trucks. The probe could possibly result in tariffs against China, as well as against key U.S. allies like Germany, Canada, Japan, and Mexico.

Treasury Secretary Steven Mnuchin  says Ross will be looking to negotiate a framework that could turn into binding agreements between companies. The constructive comments from both the U.S. and China after the last round of talks eased fears of a trade war between the countries. However, President Trump said this week that any deal would need a “different structure,” fueling yet more uncertainty over negotiations.

Trump threatened to impose $150 billion worth of tariffs on Chinese goods, fueling threats of equal retaliation from Beijing, including tariffs on large U.S. imports like soybeans.

The National Sorghum Producers welcomed news that the 178 percent tariff and anti-dumping and countervailing duty investigations were dropped. Trade talks between the two countries continued this week, showing signs that China has promised to help reduce the trade surplus by purchasing more U.S. agriculture and energy products. There are many questions being raised about those logistics, and details around the timeline and amount of increased purchasing are still looming. USDA officials have been working closely with the Trump Administration to provide information on potential products that China could buy. President Trump is pushing a $25 billion increase on U.S. agricultural products. NSP Remains engaged in these discussions and is cautiously optimistic, knowing there are a lot of ups and downs possible as negotiations continue the 1st week of June.

Sources close to the White House tell Bloomberg that President Donald Trump backed off imposing billions of dollars in tariffs on Chinese goods because of discord within the administration.

There’s also concern within the White House over the possibility of harming negotiations with North Korea. Trump also reportedly succumbed to pressure from farm-state Republicans, who heavily lobbied the administration to settle its differences with China, which had threatened to levy its own tariffs on American agricultural imports.

Treasury Secretary Steven Mnuchin  said over the weekend that the administration’s plan to impose tariffs on Chinese goods has been suspended. However, former Trump chief strategist Steve Bannon told Bloomberg the deal was “capitulation.” Some White House officials say the retreat on tariffs is a result of discord on Trump’s economic team.

Bloomberg says divisions are raw between free trade supporters like Mnuchin and White House Economic Adviser Larry Kudlow and the China hawks led by White House trade adviser Peter Navarro. Mnuchin and Navarro were said to have argued over China policy during a trip to Beijing earlier this month, and Navarro wasn’t as deeply involved during negotiations last week with a Chinese delegation that made a trip to Washington, D.C.