After months of verbally sparring with trade partners, the United States is poised to implement wide-reaching tariffs Friday on imported goods, and one in particular has the agriculture economy on edge: soybeans.
U.S. farmers export soybeans to China to the tune of $12 billion a year. China announced it would retaliate for America’s tariffs on things like aluminum and steel with a 25 percent tariff on goods it gets from the United States. In April, China imposed tariffs on U.S. pork.
From hogs to corn, market prices have dropped across agriculture in the last few weeks due to trade pressures. A lot of these commodities — like corn —are still doing better than they were a few months ago.
One exception is soybeans, prices for which haven’t been this low since March 2016. The bean’s price slid 20 percent from mid-April to July, landing at $8.48 a bushel.
Ultimately, Iowa State University economist Wendong Zhang said, the trade dispute could be a step toward more Chinese demand for U.S. agricultural products.
“Hopefully we are still thinking about putting on these tariffs only short-run,” Zhang said, “and we are still in a process of negotiating for further resolutions of the trade disputes.”
The Chinese import so many soybeans because even with increased domestic production they cannot grow enough to satisfy their own needs, Zhang said. But the country wants to use all of the tools available to stand up to pressure from the United States, he added.
“The Chinese government are learning better how to play using the WTO (World Trade Organization) rules and using their domestic policies as well,” he said, explaining that China this year imposed stricter purity expectations on soybean imports.
China also is importing more soybeans from Brazil, which some observers believe will be difficult to reverse.
Kevin McNew is chief economist of the Farmers Business Network, a startup that helps farmers get the best deals they can with buyers.
“I think the long-term implications are pretty concerning,” McNew said. “We’re already starting to see the effects in Brazil. Farmers there are already thinking about planting for their next season’s crop, which they’ll plant in August and September.”
Brazil’s farmers may plant as much as 5 percent more soybeans, he said. But he noted that many U.S. farmers locked in higher prices in the spring, so they may not lose as much as current prices suggest.
Harvest Public Media reporter Madelyn Beck contributed to this report.
Follow Amy on Twitter: @AgAmyinAmes