China said Tuesday that it will hit back against President Donald Trump with retaliatory duties of five or 10 percent against another $60 billion worth of American products.
The response comes one day after Trump issued the largest number of tariffs yet in an escalating trade dispute. Politico says China is scheduled to implement their plan on Monday to coincide with the new U.S. duties. A total of $113 billion in U.S. exports are now subject to tariffs while duties will be in place on $253 billion in Chinese products.
Trump is prepared to go even higher, saying Tuesday that he’s ready to impose duties on another $267 billion in Chinese imports. The new tariff list includes meat products, including lamb and salted beef; frozen and canned produce like peas and spinach; refined ingredients like soybean, corn, and coconut oil, to processed oats; along with coffee, teas, and liquors.
Ag groups weren’t happy with Trump’s decision to take things further. “As we head into the 2018 harvest season for corn and soybeans out here in Iowa, this escalation of the trade conflict couldn’t have come at a worse time,” says Iowa Ag Secretary Mike Naig.
OMAHA — In the latest round of tariffs, China responded Tuesday to the U.S. by announcing new 5% to 10% tariffs on $60 billion in U.S. goods after President Donald Trump late Monday announced similar tariffs on roughly $200 billion in goods from China effective Sept. 24.
China did not provide a list of specific products, but stated its tariffs would affect 5,207 lines of products from the U.S. China has already implemented multiple tariffs of 25% or higher on a range of U.S. commodity products, including soybeans, the largest U.S. export to China in 2017, valued at roughly $14 billion. Those earlier tariffs have effectively shut down exports of several major agricultural products to China.
President Trump took to Twitter on Tuesday morning, saying China’s efforts were directed at his supporters and to influence the outcome of the midterm elections.
“China has openly stated that they are actively trying to impact and change our election by attacking our farmers, ranchers and industrial workers because of their loyalty to me. What China does not understand is that these people are great patriots and fully understand that…..” Trump tweeted.
The president added, “…..China has been taking advantage of the United States on Trade for many years. They also know that I am the one that knows how to stop it. There will be great and fast economic retaliation against China if our farmers, ranchers and/or industrial workers are targeted!”
The Chinese Ministry of Commerce said the purpose of its retaliatory tariffs “is to curb the escalation of trade frictions. It is a forced response to U.S. unilateralism and trade protectionism. China hopes the U.S. side will stop trade frictions.” Chinese officials added that dialogue could produce a “win-win” and safeguard free trade.
In a statement Monday, President Trump announced 10% tariffs on $200 billion in products from China starting Sept. 24 with tariffs boosted to 25% on those products starting Jan. 1. The president stated, “Further, if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”
The tariff escalation comes as farmers are in the middle of fall harvest and looking for ways to store bumper crops of corn and soybeans while prices continue to deteriorate with waning exports. DTN’s National Corn Index on Tuesday stood at just under $3.05 a bushel, while the National Soybean Index was priced at just under $7.22 a bushel.
Sept. 1 reset the export marketing year at USDA for most crops. A year ago, China had already had outstanding sales of 6.5 million metric tons of U.S. soybeans, but as of now, new sales for the marketing year stand at 1.39 million metric tons.
Meanwhile, a coalition announced last week that “Tariffs Hurt the Heartland,” a campaign that grew out of “Farmers for Free Trade” and the National Retail Federation, is holding its first town-hall event Tuesday in Chicago. Other events are planned later this month in Nashville, Pennsylvania and Ohio to oppose the Trump administration’s tariff policies. More than 80 groups from an array of industries are tied to the initiative.
“Tariffs are taxes, plain and simple,” said Jonathan Gold, a spokesman for Tariffs Hurt the Heartland and a vice president at the National Retail Federation. “By choosing to unilaterally raise taxes on Americans, the cost of running a farm, factory or business will grow.
Gold added, “In many cases, these costs will be passed on to American families. Tariffs have already resulted in layoffs, and this escalation will continue to squeeze American businesses with higher input costs and American farmers with decreasing commodity values.”
Several other U.S. business groups criticized the Trump administration’s move Monday.
“Today’s decision makes clear that the administration did not heed the numerous warnings from American consumers and businesses about rising costs and lost jobs on Main Street, in factories, and on farms and ranches across the country,” said Tom Donohue, president and CEO of the U.S. Chamber of Commerce.
Trump reiterated his administration’s actions come after the U.S. Trade Representative “concluded that China is engaged in numerous unfair policies and practices relating to United States technology and intellectual property — such as forcing United States companies to transfer technology to Chinese counterparts. These practices plainly constitute a grave threat to the long-term health and prosperity of the United States economy.”
The president said China has been unwilling to change its practices, which sparked the first round of 25% tariffs on $50 billion in Chinese imports that the U.S. imposed earlier this summer.
“As president, it is my duty to protect the interests of working men and women, farmers, ranchers, businesses, and our country itself,” Trump stated. “My Administration will not remain idle when those interests are under attack.”
Trump then added he hopes the trade situation would be resolved, “by myself and President Xi of China, for whom I have great respect and affection.”
In anticipation of Monday’s announcement, Trump tweeted early Monday, “Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be ‘Tariffed!'”
White House adviser Larry Kudlow said on CNBC Monday that Trump has not been satisfied by recent talks with China. Kudlow also alluded to the confidence in the overall U.S. economy right now.
“The big story here is the change in policies and the economic boom,” Kudlow said.
Still, the tariff battle has translated into $4.7 billion in direct aid payments to farmers this fall because of lost exports, especially for commodities such as soybeans, pork and sorghum. USDA has created three separate programs to help farmers and agricultural exporters. The White House authorized USDA to provide up to $12 billion in aid programs for farmers.
The U.S. Trade Representative’s Office stated the list of Chinese products includes 5,745 lines of products. The U.S. dropped proposed tariffs on some consumer electronics products such as smart watches and Bluetooth devices. Other products the U.S. dropped from the list included certain chemical inputs for manufactured goods, textiles and agriculture; certain health and safety products such as bicycle helmets, and child safety furniture such as car seats and playpens.
However, the list released by USTR still included putting 10% tariffs on an array of seafood products, poultry products, vegetables, fruits and nuts from China, as well as a long list of industrial chemicals.
China’s exports of U.S. soybeans are expected to plummet over the next marketing year, according to the latest forecast.
A soybean crushing industry executive told Reuters this week that China will almost entirely replace its soybean imports from the United States with Brazilian beans and other origins in the upcoming season.
The latest forecast from China predicts Imports from the United States will plunge to just 700,000 metric tons, down from 27.8 million metric tons in the most recent marketing year.
The drop in imports of U.S. soy by China stems from the tit-for-tat trade war between the U.S. and China. In July, China imposed a 25 percent tariff on U.S. soybeans, sending purchases lower. The U.S. and China met last month in Washington, DC, but no formal talks are expected to take place soon, prolonging the trade war.
Bloomberg says President Trump wants to proceed with another $200 billion in tariffs on Chinese imports as soon as the public comment period wraps up next week.
Six people familiar with the matter spoke anonymously with Bloomberg for the article. Companies and people have until September 6th to submit comments on duties that will cover everything from semiconductors to selfie sticks. Some sources say the president will implement the tariffs and others say there hasn’t been a final decision yet.
It’s possible that the tariffs will either come in installments or several weeks after an official announcement. Bloomberg says the latest tariff threat is causing heated debate within the administration. U.S. Trade Rep Robert Lighthizer and trade adviser Peter Navarro are pushing for quick action.
Treasury Secretary Steven Mnuchin and economic adviser Larry Kudlow are asking for more time. If implemented, the $200 billion in additional tariffs would be the biggest number imposed to date and mark a major escalation in the trade war between the worlds’ two biggest economies.
Every farmer knows that his or her soybeans have a good possibility of ending up in China, but there are many other strong export markets on the Asian continent for U.S. soy products.
Asia offers a range of differing markets.
In the 2016/17 marketing year, U.S. soybean farmers exported 70.442 million metric tons of whole soybeans, soybean meal, and soybean oil to markets around the world. A little over 14.645 MMT or just over 20 percent of these exports went to Asian countries, not including China. These exports were valued at $5.944 billion.
Tony Stafford, director of business development for the Missouri Soybean Association, says Asia is a very important market for soybean farmers in Missouri and across the United States. Stafford represented Missouri at the 2017 Grain Transportation Conference in Vietnam and has traveled to Cambodia and Myanmar on behalf of the American Soybean Association’s (ASA) World Initiative for Soy in Human Health (WISHH) program. Stafford says that developing personal relationships helps to create an even closer connection between U.S. growers and their destination markets.
Diverse Markets Require Varying Approaches
Soybeans are the largest agricultural commodity exported from the United States, representing more than $28 billion in export value in 2017, making export markets hugely important to U.S. soybean farmers’ profitability. Last year marked the second year in a row that exports exceeded 60 percent of U.S. soybean production.
The U.S. Soy industry is keenly aware of the importance of export markets. In 2017, a study through the United Soybean Board (USB) helped determine the most impactful global soy markets and assessed markets into different categories. Most of the markets in Asia are categorized as expansion or mature. In fact, 93 percent ofU.S. Soy-related trade value lies in expansion and mature markets.
In expansion or growth markets, the U.S. Soybean Export Council (USSEC), the international marketing arm of the U.S. Soy industry, works to continue to develop relationships and demonstrate the value of U.S. Soy, creating a preference for U.S. soybean products. In Asia, there are four expansion markets: the Philippines, Indonesia, Thailand, and Vietnam.
In mature markets, work focuses on policy issues such as biotechnology. In these countries, the U.S. Soy industry works to maintain a good, respected relationship and provide support when asked. Three Asian markets are categorized as mature: Japan, South Korea, and Taiwan.
WISHH focuses on trade and long-term market development for U.S. soybean farmers, while fueling economic growth and value chain development. WISHH helps to enhance countries’ protein intake through market development, education, and research, recognizing that the developing nations of today are tomorrow’s customers for U.S. Soy and soy protein. Currently, WISHH works in two Asian countries: Cambodia and Myanmar. The Missouri Soybean Association and other qualified state soybean boards (QSSBs) support the ASA/WISHH program to develop new markets for U.S. Soy products.
Let’s take a deeper dive into these markets.
The Philippines has a close and longstanding relationship with the U.S.
Last year, the Philippines overtook Mexico to become the number one importer of U.S. soybean meal for the first time. In 2017, U.S. soybean meal held a solid 70 percent market share, and the country is the world’s sixth largest pork producer. While the majority of its soybean meal is destined for swine feed, U.S. Soy is also used for poultry and aquaculture.
Thanks to its sound economy and competitive expatriate workforce, the Philippines is one of Asia’s most dynamic emerging markets.
This country is the third largest importer of U.S. whole soybeans in the world. Over 92 percent of those soybeans are used to produce tempeh, a traditional native dish that binds soybeans into a cake-like form.
Indonesia is the 15th largest feed producer in the world. With the vast majority of its population of the Islamic faith, 80 percent of the total animal feed produced is for poultry.
With over 255 million people and a low per capita consumption of meat protein, the Indonesian market is expected to continue to grow.
Thailand has made tremendous progress in social and economic issues despite facing a number of political challenges. In 2011, the World Bank upgraded Thailand’s income categorization from a lower-middle income economy to an upper-middle income economy. Poverty has declined substantially over the last 30 years from 67 percent in 1986 to 11 percent in 2014 as incomes have risen.
Several highlights make Thailand a rising star for increasing U.S. Soy imports.
A major exporter of poultry products, the country is also home to a thriving aquaculture and shrimp industry and is the region’s largest shrimp producer. Thailand is ranked 14th in global feed production and boasts the largest domestic soy crushing industry in Southeast Asia. Finally, Thailand’s soy food and beverage industry is the largest and most sophisticated in the region.
The 35thlargest global economy is also the world’s 17thlargest feed producer. Vietnam’s primary food sectors include swine, poultry, and aquaculture, and the country’s commercial feed production has more than doubled since 2005. Per capita meat consumption is relatively low, compared to countries with higher incomes, but its middle and upper classes are on track to double by 2020.
Although Vietnam is led by a communist government, it is a relatively open and market-driven country.
“Vietnam is one of the world’s fastest growing markets for soy because of rapid economic growth and rising population,” says analyst John Baize. He recounts giving a presentation on global soy supply and demand and moderated a panel discussion of U.S. farmers attending the 2017 Asia Grain Transportation Conference in Ho Chi Minh City. “I [was] very impressed with those attending and with the positives happening in this country. Vietnam ostensibly remains a communist country, but you would not realize it because of all of the capitalism happening [there]. Great, growing market for U.S. Soy.”
Despite its status as a mature and small market, South Korea became the second largest export market for U.S. soybean oil in the 2016/17 marketing year, thanks to the Korea – U.S. Free Trade Agreement. Technical and trade seminars and visits to the U.S., hosted by USSEC, also have helped this market to remain relevant. In fact, USSEC forecasts that U.S. soybean oil exports will grow to more than $150 million in 2018, making Korea the largest market for U.S. soybean oil exports.
The U.S. also has an 80 percent market share in soybeans used for food here.
The country is home to 50 million soy consumers, with the bulk of its soy used for swine, beef, poultry, and dairy. The South Korean crushing sector depends 100 percent on imports.
Korea also will soon become an opportunity for food grade soybeans and high oleic soybean oil.
Japan has experienced two decades of flat-to-negative economic growth. The country has a stable birth rate but a higher death rate associated with a rapidly aging population. This impacts potential growth of consumption of animal protein and vegetable oil.
Declines in soybean crush have plateaued and there have been increases in the soybean crush at the expense of canola. Despite the shrinking soybean crush, the U.S. enjoys a 70 percent market share in Japan.
Japan is the largest market for U.S. identity preserved (IP) food-grade soybeans. The U.S. Soy industry has been active in the Japan market for more than 60 years, and USSEC continues to nurture long-term relationships with customers there.
This country of 23 million imports all of its soybean needs. 70 percent of its food-grade soybeans are GMO soybeans grown in U.S. fields. Currently, Taiwan’s animal production is struggling to compete with imported meat products.
Three Taiwanese companies have added the Sustainable U.S. Soy (SUSS) logo to their products, which USSEC rolled out in 2016 as a pilot program in North Asia.
Taiwan’s economic growth is increasingly tied to trade and tourism with China and it continues to be a strong destination for containerized soybeans.
WISHH’s work in Myanmar is with human foods, focusing on food grade soybeans for soymilk and tofu processors. USSEC works in the aquaculture and animal feed sectors.
In Cambodia, WISSH works with both human foods and animal feeds. There is a heavy focus on feed mills producing for the swine and poultry sectors, along with work with soymilk and tofu producers.
WISHH Asia Division Director Alan Poock says that the Missouri Soybean Association will help fund an aquaculture feeding trial in Cambodia starting this July.
Transporting soybeans quickly and efficiently is top of mind for farmers in Missouri, says Mike Steenhoek, executive director of the Soy Transportation Coalition.
“One of the reasons Missouri soybean farmers are so well positioned to benefit from the growth in soybean demand in Indonesia, Thailand, Vietnam, and other Asian countries is the efficient access to the Mississippi River – our nation’s chief maritime highway. Other soybean producing nations have navigable waterways, but the Mississippi River is unique in that it penetrates into some of the most productive farm ground in the world, “Steenhoek explains.
“As a result, Missouri soybean farmers can access international demand due to their proximity to cost effective river transportation. Making sure the Mississippi River is properly maintained and continuing to explore how to better utilize the Missouri River – an asset with unrealized potential – are essential to ensuring Missouri soybean farmers remain profitable in the future.”
Clearly, says Stafford, there are many reasons for Missouri farmers to be optimistic about U.S. Soy exports to Asia.
“We are very excited about the opportunities in Asia. With one of the youngest work forces in the region and a real appetite for U.S. products, the Missouri Soybean Association is concentrating our effort in Vietnam. We’re also starting to expand some efforts to Cambodia and Myanmar as WISHH continues to develop those markets.
“I feel like we have a lot to look forward to.”
Soybeans were one of the first major casualties in the ever-escalating trade war between the U.S. and China. Russia is hoping to take advantage of the situation and cut deals with Chinese agribusinesses to make up for lost supply.
The Washington Post says the Kremlin will offer roughly 2.5 million acres of arable land to foreign investors. Analysts are describing it as a bid to replace the U.S. as China’s most reliable soybean supplier. China is short on filling its soybean needs after the high stakes trade war got going with the U.S. through the summer. Beijing dramatically cut purchases of U.S. soybeans in response to the tariffs imposed on Chinese products by the Trump Administration.
The Post article says Chinese officials are making plans to trim around seven million soybean tons off of the nearly 33 million tons it’s been buying annually from U.S. farms. Soybeans represent U.S. farmers’ single largest agricultural export to China, which takes approximately 60 percent of the world’s supply every year. Beijing’s cut in American purchases as sent U.S. bean future prices tumbling.
The trade war between China and the U.S. seems primed to worsen as the governments failed to make progress in two days of discussions. Reuters says the two sides met last week with low expectations of progress and there are no further talks scheduled at this time.
A source close to the negotiations told Reuters that Chinese officials have raised the possibility of no further talks until after the U.S. elections in November. The lack of progress adds to uncertainty for businesses who now have to weigh the risks when considering investments in the U.S. or China. A new round of tariffs could take effect as soon as early September. There’s no guarantee they’ll be the last tariffs or that there won’t be other measures taken as well.
The two countries engaged in talks for the first time since last June. U.S. officials were due to meet with delegations from the European Union and Japan to discuss joint efforts to confront China at the World Trade Organization over its industrial subsidies and conduct of its state-owned enterprises.
BEIJING — China, the world’s largest producer of pork, is battling an African swine fever outbreak that could potentially devastate herds.
The disease, which only affects pigs and wild boar, has been detected in at least three locations across the vast country. Thousands of pigs have died or been culled in an effort to curb the spread of the highly contagious viral disease.
The appearance of the disease comes as China seeks to shift pig rearing from farmyards to vast breeding operations where waste and the spread of disease can be better controlled.
China produces as many as 600 million pigs annually and pork is a staple of the Chinese diet, accounting for more than 60 percent of animal protein consumed.
The fluctuating price of the staple meat is highly sensitive and the government maintains a large frozen supply to release when prices rise too high. Soaring demand for more meat and richer diets over recent years have brought massive profits to large firms able to harness the latest technology for improved efficiency.
In the eastern city of Lianyungang, 15,000 pigs have been culled after an outbreak was detected last week, according to the Ministry of Agriculture. Inspectors found 615 pigs had been infected and 88 died. Measures are also being taken to disinfect contaminated areas and block the disease’s spread to other farms.
Earlier this month, Shenyang in the northeast reported China’s first outbreak of the disease, with 47 pig infected, all of which died, the ministry said. Infected pigs were also found last week at a slaughterhouse in the city of Zhengzhou, where they had been transported from Jiamusi in the far north. Authorities were looking into the source of that outbreak in which all 30 of the infected pigs died.
African swine fever outbreaks have also been reported in the European Union, chiefly in the Baltics, Poland and Romania.
Denmark plans to erect a 70-kilometer (43.4-mile) fence along the German border to keep out wild boars, in the hope of preventing the spread of African swine fever, which stands to jeopardize the country’s valuable pork industry.
MANHATTAN — Kansas State University experts are providing guidance to officials in East Asia on the emerging problem of African swine fever.
Jürgen Richt, Regents distinguished professor and director of the university’s Center of Excellence for Emerging and Zoonotic Animal Diseases, known as CEEZAD, is an internationally recognized expert on transboundary animal diseases. He was in Asia to deliver a series of presentations when an outbreak of African swine fever was reported in China on Aug. 1. A second outbreak was reported on Aug. 16, and a third on Aug. 19.
African swine fever is a highly contagious disease of domestic pigs and wild boar. The disease causes high fever, respiratory problems, weakness, and stillbirths. The economic consequences for the pork production industry are grim: Mortality rates among affected animals approach 100 percent. More than 8,000 pigs were culled in response to the initial outbreak, according to news reports.
“Efforts to handle a potential outbreak have not succeeded, so we have to be concerned about the disease spreading across national boundaries,” Richt said. “The first outbreak occurred only a little more than 120 miles north of North Korea.”
Richt spoke with veterinary medicine faculty and students at Konkuk University in Seoul, South Korea, and with members of South Korean media and swine associations. He said South Korea is not well prepared to handle the outbreak and that the country is working to improve its emergency procedures. Containing the disease is particularly difficult because it tends to spread via wild boars.
Richt also discussed the challenges facing those trying to develop vaccines for African swine fever. CEEZAD is actively involved in the effort to produce mitigation strategies to control African swine fever and to develop vaccines.
Young Lyoo, dean of the Konkuk University College of Veterinary Medicine, said Richt’s information will help provide a front line of defense to save a major industry and protect a valuable protein source.
“Dr. Richt provided not only expert knowledge and opinion on the disease and a control, but also disseminated awareness to the public, government and industry through media exposure,” Lyoo said. “His visit showed how important international cooperation is to fight against contagious transboundary disease.”
Richt said the disease presents trade problems for China and other Asian countries. China produces nearly half the world’s pork.
“African swine fever is a threat to world trade in the pork industry, which will ultimately affect western Europe, the United States and other trade partners,” he said.
Stephen Higgs, director of Kansas State University’s Biosecurity Research Institute, and Wenjun Ma, associate professor of diagnostic medicine and pathobiology at the university’s College of Veterinary Medicine, also traveled to China to give invited talks at the Conference on Animal Infectious Diseases and Human Health jointly conducted by the Chinese Association of Animal Science and Veterinary Medicine and the Chinese Society for Immunology in Harbin, China. Higgs described work at the Biosecurity Research Institute, Richt presented a lecture on Rift Valley fever virus, and Ma discussed his work on bat influenza viruses.
Higgs said the invitations indicate international respect for Kansas State University research in infectious disease and biodefense.
“Our facilities and experts are second to none,” Higgs said. “We are keeping a close eye on disease outbreaks around the world and maintaining a rigorous research program to defend against economically devastating livestock diseases.”
A Chinese delegation will travel to the U.S. as part of the ongoing trade war as both sides “remain far apart.” China said Thursday the delegation will meet with U.S. Treasury Undersecretary David Malpass to discuss trade issues.
However, the South China Morning Post reports observers say the talks are unlikely to yield any breakthrough, but could lead to further negotiations aimed at de-escalating the trade war. Malpass has no authority to negotiate with China on trade, but can set up the basic protocol for a possible future round of talks.
The U.S. is due to issue tariffs on another $16 billion worth of Chinese goods in the next week, with China again vowing to retaliate against the U.S. tariffs. The visit between China and the U.S. is mainly viewed as a means to check and see if future dialogue between the two nations is possible.
YOUNG NEBRASKAN WEEK will be September 24-28 and York Young Professionals will be hosting several local activities. Lattes with Leaders on Tuesday, September 25 with Jill Koch, York General. Then a luncheon on Wednesday with STRIV owner, Taylor Siebert. On Thursday, York Young Professionals will[...]