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Serving: United States
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TOP CUSTOMER: China is the world’s leading soybean importer, with the U.S. providing close to 40% of the beans China buys. China is the second-largest purchaser of U.S. pork.

Trade sanctions will cost farmers

“Bull in a China Shop” approach to trade will likely spur retaliation against U.S. ag products.

Iowa Soybean Association leaders were in China on a trade mission March 22 when President Donald Trump announced his intentions to impose up to $60 billion in tariffs and sanctions against China. He’s targeting technology and telecommunications products the U.S. buys from China, slapping import tariffs on them.

Trump decided to do this after an investigation by the U.S. Trade Representative’s office concluded China is violating intellectual property rights and not abiding by international trade rules. A few weeks earlier, Trump announced tariffs on aluminum and steel imports.

ISA President Bill Shipley says the White House announcement on tariffs against China poses an immediate and grave threat to China’s industry and to Iowa agriculture. It jeopardizes more than three decades of efforts to establish relationships with soybean processors, buyers and traders, says Shipley, who farms in southwest Iowa.

 “No winners emerge from a trade war and that’s particularly true when it involves food and nutrition,” Shipley says. “It’s very clear from our conversations with processors and other soybean buyers in China that our most important customer of U.S. soybeans doesn’t desire a trade war. The people just want to do business. So do U.S. farmers, particularly as we prepare to go to the fields and plant what could be a record number of acres.”

China, with a population of more than 1.4 billion, imports 62% of global soybean production. Nearly 39% of China’s soybean imports originate from the U.S., valued at nearly $1.4 billion. Iowa officials have warned the White House about negative implications for soybeans and other ag products if sanctions and tariffs are imposed.

In just five years, U.S. farm income has declined 50% as crop prices have dropped 40%. Retaliation by our largest soybean customer will place a further drag on prices received and further hurt our already challenged farm economy.

Ag target of Chinese retaliation
Agricultural trade nets the U.S. one of its few trade surpluses, with soybeans among the most valuable, Shipley says. The ISA delegation heard directly from Chinese government officials that soybeans and pork are a prime target for retaliation. The move would significantly endanger a relationship that goes back more than 30 years when China’s population was approaching 800 million.

“A trade war with China involving U.S. ag products, especially soybeans and pork, would be devastating,” says ISA CEO Kirk Leeds. “With U.S. commodity prices struggling and other countries ramping up soybean production, this is precisely the wrong time for the U.S. to retreat as a trusted source of high-quality soybeans. South America will be the primary beneficiary if we do.”

Relationships sell ag products
Last year, Iowa soybean farmers produced 562 million bushels of beans valued at more than $5 billion. The impact of tariffs will have reverberations far beyond Iowa’s fields. Soybean production involves numerous and important sectors of the ag economy including seed, transportation, processing and manufacturing.

Leeds and Shipley echo calls by other farm and commodity organization leaders for the White House to quickly reconsider its call for such massive and immediate tariff sanctions. Unfortunately, agricultural trade is often the first casualty in any trade war of retaliation. When that happens, everyone loses.

The market for soybeans continues to grow in China. China’s soybean imports are expected to increase 7% to 100 million metric tons by 2019, USDA projections show. “Our ability to grow beans for China is invaluable,” Shipley says. “We have to keep these relationships open with China. It’s relationships that sell our products.”

TAGS: Soybeans
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