No one has officially declared ‘war’ in the way of trade between the U.S. and China, but the nations are no doubt in the makings of a trade war.
President Donald Trump insisted that “we are not in a trade war with China.” However, China fired back a proposed list of tariffs less than 24 hours after the Trump administration rolled out a tariff proposal against China. While the proposal from China includes a 25 percent tariff on soybeans, market experts say it’s important to keep the soybean market in perspective. In a daily newsletter, Jim Bower of Bower Trading points out the phrase “do what China does, not what they say.” The latest tariffs by President Trump and China are not yet set in stone. Trump will seek comments on his proposal for 30 days, and China allows 180 days for negotiations before implementing the latest proposal. That time allows a chance for both nations to negotiate an agreement if desired.
Bower, in his daily newsletter, points out that Brazil, another major source of soybeans, does not have enough of the commodity to fully supply China. And, the only major soybean growing areas of the world are North and South America. Future demand my shift, but global demand should not decrease, overall.