CONNECTICUT.- With the threat of tariffs and counter-tariffs between Washington and Beijing looming, Chinese buyers are canceling orders for U.S. soybeans, a trend that could deal a blow to American farmers if it continues. At the same time, farmers in China are being encouraged to plant more soy, apparently to help make up for any shortfall from the United States.
Beijing has included soybeans on a list of $50 billion of U.S. exports on which it has said it would impose 25 percent tariffs if the United States follows through on its threats to impose the same level of tariffs on the same value of Chinese goods.
The U.S. tariffs could kick in later this month; China would likely retaliate soon after. It can take a month or longer for soybean shipments to travel from the U.S. to China. Any soybeans en route to China now could be hit by the tariff by the time they arrive. “The Chinese aren’t willing to buy US soybeans with a 25 percent tax hanging over their head,” said Dan Basse, president of AgResource, an agricultural research and advisory firm.
“You just don’t want the risk.” China typically buys most of its soybeans from South American nations such as Brazil and Argentina during spring and early summer. It shifts to U.S. soybeans in the fall.
As a result, for now, the cutbacks from the United States are relatively small. But should they persist, it could cause real pain to U.S. farmers. Roughly 60 percent of U.S. soybeans are shipped to China. There might also be a political impact: Three of the top five soybean-exporting states — Iowa, Indiana and Nebraska — voted for President Donald Trump in 2016. Illinois, the top soybean exporter, and Minnesota, the third-largest, backed Hillary Clinton.
Basse said that it has been roughly three weeks since China has made any major soybean purchases, an unusually long delay. Some Chinese buyers might be showing support for their government in the trade dispute by turning away U.S. soybeans, Basse said. The dispute may also make it seem too risky to buy from the United States over the long run. “The United States could lose the reliable supplier label that we’ve had these many years,” Basse said.