Tag Archives: China

China’s implementation of tariffs on U.S. products means U.S. pork faces a 62 percent tariff level. The National Pork Producers Council responded that U.S. pork farmers now face large financial losses and contraction because of escalating trade disputes, meaning “less income for pork producers and, ultimately, some of them going out of business.”

China announced a new 25 percent tariff in response to U.S. action under Section 301 of the Trade Act of 1974. That tariff is on top of the 25 percent punitive duty levied by China in early April in response to U.S. action under Section 232 of The Trade Expansion Act. U.S. pork already had a 12 percent tariff on exports to China.

The country also has a 13 percent value-added tax on most agricultural imports. China represented 17 percent of total U.S. pork exports by value in 2017. NPPC President Jim Heimerl (Hi’-merle) added: “We need these trade disputes to end.”

A Bloomberg report says President Donald Trump is threatening to put a tariff on every single import from China. The world’s two largest economies exchanged blows in a trade war that isn’t expected to end anytime in the near future.

After months of trade rhetoric back and forth, a 25 percent tariff took effect on $34 billion Chinese goods entering the U.S. just after midnight, Washington time, on Friday. Farm equipment and airplane parts are just a couple of the many items targeted by the duties. China immediately hit back with duties on U.S. shipments, including soybeans and automobiles.

Neither side appears to want to back down, either. Trump is already eyeing another $16 billion in tariffs and says the overall total could reach up to $500 billion. China’s Commerce Ministry is accusing the U.S. of “bullying” and igniting the “largest trade war in history.” Bloomberg says there is a risk that a spiraling conflict will undermine economic growth and inflict higher prices on both consumers and companies. The Federal Reserve has already noted that some firms have been slowing investments.

BEIJING (AP) — The United States hiked tariffs on Chinese imports Friday and Beijing announced it was retaliating against American goods in a technology dispute between the world’s two biggest economies that President Donald Trump says he is prepared to escalate.

Washington imposed 25 percent tariffs on $34 billion worth of Chinese imports, a first step in what could become an accelerating series of tariffs.

Retaliatory measures “took effect immediately,” said a Chinese foreign ministry spokesman, Lu Kang. Hu gave no details, but the Communist Party newspaper People’s Daily said the customs agency was carrying out a plan announced last month to impose 25 percent tariffs on a $34 billion list of American goods including soybeans, pork and electric cars.

Companies worry the spiraling dispute could chill global economic growth, but Asian financial markets took Friday’s developments in stride.

Japan’s main stock index, the Nikkei 225, gained 1.1 percent while the Shanghai Composite Index added 0.5 percent. Hong Kong’s Hang Seng rose 0.8 percent.

On Thursday, Trump said higher tariffs on an additional $16 billion in Chinese goods were set to take effect in two weeks. He spoke to reporters who flew with him to Montana for a campaign rally.

After that, the hostilities could intensify: Trump said the U.S. is ready to target an additional $200 billion in Chinese imports — and then $300 billion more — if Beijing does not yield to U.S. demands and continues to retaliate.

That would bring the total of targeted Chinese goods to potentially $550 billion — more than the $506 billion in goods that China shipped to the United States last year.

The Trump administration contends China has deployed predatory tactics in a push to overtake U.S. technological dominance. These tactics include cyber-theft and requiring American companies to hand over technology in exchange for access to China’s market.

Chinese officials reject accusations of theft and say no foreign company is obligated to share technology. But rules on auto manufacturing and other industries require companies to work through state-owned partners, which forces them to share know-how with potential competitors.

The Commerce Ministry said Trump “ignited the biggest trade war in economic history.”

“The United States has blatantly violated WTO rules,” said Hu, the foreign ministry spokesman. “Any unilateral pressure will be futile.”

Washington has strained relations with potential allies in its dispute with Beijing by raising import duties on steel, aluminum and autos from Europe, Canada, Mexico and Japan.

Trump’s confrontational outlook applies to other trading partners as well as China, said Tai Hui, chief strategist for JP Morgan Asset Management, in a report.

“This is a potential concern for the outlook of corporate investment and consumption around world,” said Hui.

The official China Daily newspaper accused the Trump administration of “behaving like a gang of hoodlums.” It said they would damage the global economy unless other countries stop them.

“There should be no doubting Beijing’s resolve,” the newspaper said.

The American Chamber of Commerce in China appealed to both sides to negotiate a settlement.

“There are no winners in a trade war,” said the chamber’s chairman, William Zarit, in a statement. It said American companies want fairer treatment but will be hurt by U.S.-Chinese tensions.

“We urge the two governments to come back to the negotiation table,” said Zarit.

SAO PAULO, Brazil (DTN) — While U.S. farmers are dealing with a lower soybean futures contract, the world’s largest soybean exporter, Brazil, is facing its own brand of export problems, as soybean trade has been nearly suspended because of higher FOB basis.

FOB — “free on board” or “freight on board” — refers to the price a buyer or seller pays to take possession of a commodity at port.

Premiums for August beans in Paranagua Port south of Sao Paulo surged to US$1.95 per bushel on Monday from $1.22 per bushel last week after the announcement of China imposing a 25% tariff on U.S. soybeans exported to China. Sellers expected Chinese buyers to shift more soybean demand to Brazil. Yet, sellers may have been over exuberant because the basis is sliding lower to $1.70 per bushel this week because of the lack of buyers.

That premium price move is countered by continued shipping delays at Brazilian ports, which are still trying to recover from a trucker strike in late May. Though the protests officially ended, truck traffic remains slower than normal.

“More than 5.5 million metric tons (202 million bushels) of soybean was delayed in the port for export so far,” said Thiago Piccinin, president of Lotus Grains and Oilseed, a trading house in Sao Paulo. “Freight in Brazil is still a big problem. Only a few truck drivers are loading beans to the port, many of them still waiting for a result of the freight negotiation.”

March to September is the main Brazilian soybean marketing season, and premiums should be around 50 cents a bushel in normal years. “The current high premiums are partially because of the U.S.-China trade dispute and partially because of the truck freight problems,” Piccinin said.

The Brazilian government is trying to increase the freight to make the truck drivers happy, but the higher freight brought difficulties for the agriculture industry. Trading companies need to ship soybeans to the port. In the meantime, the corn crop is being harvested and also needs freight to port.

Freight costs are 20% higher compared to before the strike and may increase another 10% depending on the negotiations between the government and the truck drivers’ association. Nobody knows what the freight will be. Some truck drivers are loading on a negotiated price with the traders, as they need to make money to survive, while other drivers are just waiting for a final outcome of talks with the government.

Big trading companies, such as ADM, also may have troubles this year as they already bought the beans from the farmers based on the old freight cost, but now likely will need to pay a higher freight to ship it.

“There are a lot of sellers in the interior, but trading companies are not buying, as they do not know how to calculate the freight,” Piccinin said.

The higher freight costs and lower CME prices also are coming back to bite Brazilian farmers who haven’t already sold. While there might be a premium for August beans, spot cash prices are about 10% lower than they were a month ago.

“Today is the first day we have a soybean price after 20 days with no business and no price offers, as the trading companies are not buying,” said farmer Ricardo Arioli Silva on a phone call while harvesting sunflowers and corns on his farm. “The price now is 63 reals per bag (US$7.72 per bushel), much less than 70 reals per bag (US$8.58 per bushel) a month ago. We do not want to sell our beans in this lower price.”

Silva farms 5,000 acres at Campo Novo do Parecis in Mato Grosso.

As the freight is confusing for the supply chain, nobody wants to take the risk to do business. The movement of soybeans in the export pipeline is difficult.

“We hope the soybean price can be a little higher, so farmers can sell their products,” said Silva, “Some farmers need money to pay their bill, while others need to buy seed and chemicals for the next season.

China could ratchet up its trade war tactics against the United States as President Donald Trump has escalated the trade war between the two nations this week.

Politico points out that China knows how to fight a trade war and could go beyond retaliatory tariffs next. China has been known to successfully encourage its 1.4 billion population to give up products from targeted countries, such as Big Macs, and make business harder for U.S. companies in China.

While China has far fewer U.S. imports to impose tariffs on, a trade expert told Politico: “The reality is the Chinese can do quite a bit to hurt U.S. companies in the Chinese market.” Tariffs that have yet to take effect will target U.S. agricultural products. Earlier this week, business and agriculture groups penned a letter to Congress seeking lawmakers involvement to reign in Trump’s trade agenda.

The group asked for congressional oversight, while detailing how Congress has the power to regulate foreign trade.

ST. LOUIS – In response to the announcement regarding U.S. tariffs on Chinese imports, the American Soybean Association (ASA), the U.S. Soybean Export Council (USSEC) and the United Soybean Board (USB) release the following statements.

“Nobody is a winner today,” says ASA Vice President Davie Stephens, a Kentucky soybean grower. “In the midst of a down farm economy and down farm prices, this uncertainty has led to a drop of market prices. Adding additional export market uncertainty through an expected 25 percent retaliatory tariff on U.S. soybeans into China ensures that soy growers and the rural communities that depend on them will see the effects of this for years to come. As the largest importer of U.S. soybeans, China is a vital and robust market we cannot afford to lose.”

“We know our U.S. farmers are great at producing soybeans and so do our customers; globally, consumers are demanding soy products in record volume,” says USSEC Chair Derek Haigwood, a soybean farmer from Newport, Arkansas. “USSEC is actively working to minimize the impact of this action on U.S. farmers and the U.S. Soy industry by ensuring customers around the world understand the value that U.S. Soy provides.”

“The soy checkoff continues to focus on market diversification for U.S. soybeans to improve profit potential for all U.S. soybean farmers,” says USB Chair Lewis Bainbridge, a soybean farmer from Ethan, South Dakota. “In times like these we need to keep current and potential soy users informed about the benefits of U.S. Soy.”

The U.S. Soybean Export Council connects U.S. soybean farmers with opportunities to improve human nutrition, livestock production and aquaculture. This mission is accomplished with a science-based technical foundation and a global network of partnerships including soybean farmers, exporters, agribusiness and agricultural organizations, researchers and government agencies. USSEC operates internationally and works with aquaculture programs in different nations to help ensure sustainability and profitability for industry producers. USSEC programs are partially funded by the United Soybean Board.

USB’s 73 farmer-directors work on behalf of all U.S. soybean farmers to achieve maximum value for their soy checkoff investments. These volunteers invest and leverage checkoff funds in programs and partnerships to drive soybean innovation beyond the bushel and increase preference for U.S. soy. That preference is based on U.S. soybean meal and oil quality and the sustainability of U.S. soybean farmers. As stipulated in the federal Soybean Promotion, Research and Consumer Information Act, the USDA Agricultural Marketing Service has oversight responsibilities for USB and the soy checkoff.

ASA represents all U.S. soybean farmers on domestic and international issues of importance to the soybean industry. ASA’s advocacy efforts are made possible through voluntary farmer membership by farmers in 30 states where soybeans are grown. For more information on ASA, visit www.soygrowers.com.

OMAHA (DTN) — Leaders from the American Soybean Association could only respond in dismay Friday after President Donald Trump announced he was going ahead with $34 billion in tariffs against Chinese technology products because China wasted little time Friday imposing a 25% tariff on U.S. soybeans and other agricultural products.

The Trump administration announced Friday morning that it would place a 25% tariff on goods that contain “industrially significant technologies.” These include products under China’s “Made in China 2025” strategy. The U.S. can no longer tolerate losing technology and intellectual property to unfair economic practices, the White House stated. The administration also said it was preparing tariff lines on another $16 billion in Chinese goods that would be announced later this summer.

“These tariffs are essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs,” the White House stated. “In addition, they will serve as an initial step toward bringing balance to the trade relationship between the United States and China.”

CHINA’S TARIFFS TO BE IMPOSED

Directing almost equal countermeasures, China’s Ministry of Commerce officials announced early Saturday in China that the country would impose 25% tariffs on $34 billion in U.S. products on July 6 on a range of products, including soybeans, but also products such as pork and chicken, as well as a list of non-agricultural products. Soybeans alone account for about roughly $14 billion in export value to China.

In the same vein as the U.S., China also stated it was preparing another round of 25% tariffs on $16 billion in U.S. products that would include chemicals, medical equipment and energy products.

The White House had stated Friday that the U.S. would pursue additional tariffs if China retaliates, “such as imposing new tariffs on United States goods, services, or agricultural products; raising non-tariff barriers; or taking punitive actions against American exporters or American companies operating in China.”

Even before China made its official announcement, commodity futures fell sharply for grains and oilseeds, though corn and wheat contracts rallied to reflect more modest daily losses. Soybeans, one of the largest U.S. export products to China, saw an early 21 3/4-cent drop in the July contract to $9.05 on the CME. The November contract fell 19 1/2 cents to $9.30. DTN’s National Soybean Index closed at $8.64 Thursday, priced 63 cents below the July contract and at its lowest price in 10 months.

Agriculture Secretary Sonny Perdue held a press call late Friday largely to talk about his trip to Canada, but he also got multiple questions about how USDA would respond to the Chinese tariffs and whether he was ready to tap into as much as $15 billion in Commodity Credit Corp. funds to help farmers. Perdue said it was important to see how the price situation plays out for farmers rather than looking at daily market fluctuations.

SEE HOW MARKET PRICES PLAY OUT

“You can’t demonstrate any damage on the day that tariffs are announced,” Perdue said. “We’re going to look at this very carefully. We’re going to calculate — we have been calculating market impact on a weekly basis on a number of months now, frankly … When we determine and if we determine there is legitimate and lasting market impact, based on market disruption of tariffs and retaliation, then we’re prepared to take action.”

The American Soybean Association used words such as “distraught” and “devastating” to express the group’s frustration, after the group twice sought meetings with Trump to highlight ways that boosting soybean exports to China could be part of a trade solution rather than resorting to tariffs. Instead, the group noted a “new anxiety” for soybean growers.

“As a soy grower, I depend on trade with China,” said Davie Stephens, vice president of ASA and a Kentucky farmer. “China imports roughly 60% of total U.S. soybean exports, representing nearly one in three rows of harvested soybeans. This is a vital and robust market that soy growers have spent over 40 years building and, frankly, it’s not a market U.S. soybean farmers can afford to lose.”

FARM BUREAU ANALYSIS

The Nebraska Farm Bureau stated its own preliminary analysis showed in 2016 that China added $2.29 per bushel of soybeans for Nebraska farmers, as well as $3.82 per head of pork and $26.36 for beef, just based on hides and skins value. On a per farm basis, China trade added an average of $16,600 per farm in Nebraska, though the value was much higher in some counties.

“While the entirety of the U.S.-China trading relationship won’t disappear overnight, these actions will have significant consequences, which have the potential to greatly damage farm and ranch families for years to come,” said Steve Nelson, president of the Nebraska Farm Bureau.

Tom Sleight, president and CEO of the U.S. Grains Council, noted that China and the U.S. have been doing this tit-for-tat since at least 2010. The U.S. has been hit with trade actions by China against sorghum, ethanol, corn and dried distillers grains. But Sleight added he is concerned tariffs will continue to open markets to other competitors at the expense of U.S. farmers. “Bottom line: Tariff battles are never productive.”

ALARM SOUNDED

Tom Donohue, president and CEO of the U.S. Chamber of Commerce, criticized the White House action in a statement, saying the Chamber has sought to sound the alarm against such actions.

“Imposing tariffs places the cost of China’s unfair trade practices squarely on the shoulders of American consumers, manufacturers, farmers, and ranchers,” Donohue said. “This is not the right approach.”

The U.S. tariffs were added to more than 1,300 tariff lines of products made in China, most of which will go into effect on July 6. The main tariff line of products, valued at roughly $34 billion, involved industries such as aerospace, information technology, robotics, industrial machinery, new materials and automobiles. Another set of products, valued at $16 billion, will undergo review and public comments before tariffs would be issued on those as well.

The Association of Equipment Manufacturers said Friday the tariffs jeopardized the industry because China constructs different types of construction and agricultural equipment. The tariffs affect U.S. companies importing equipment that is added to U.S. machinery.

“Given depressed U.S. farm incomes, the move is expected to disproportionately hurt America’s rural economy,” the group stated.

TAX ON LIVELIHOODS

Brian Kuehl, executive director of Farmers for Free Trade, a group set up to tout NAFTA and avoid trade disruption, said the White House move is “downright scary. It’s no longer a negotiating tactic, it’s a tax on their livelihoods. Within days, soybean, corn, wheat and other American farmers are likely to be hit with retaliatory tariffs of up to 25% on exports that keep their operations afloat. When they do, they’re not going to remain silent.”

Kuehl added that the tariffs are not only a loss for U.S. farmers, but a win for U.S. export competitors. “When American soybeans and corn become more expensive, South America wins. When beef becomes more expensive, Australia wins,” Kuehl said. “As this trade war drags on, farmers will rightly question why our competitors are winning while we’re losing.”

Ohio State University released a report Wednesday stating farmers in that state “could lose more than half of his or her annual net income” due to Chinese tariffs.

Farmers for Free Trade Executive Director Brian Kuehl  says the Trump Administration’s approval of $50 billion worth of imported goods from China is “scary.” The tariffs on Chinese imports will result in heavy retaliatory tariffs on U.S. agricultural exports. “For American farmers, this isn’t theatrical anymore, it’s scary,” Kuehl says. “It’s no longer a negotiating tactic, it’s a tax on their livelihoods.

Within days, soybean, corn, wheat, and other American farmers to be hit with retaliatory tariffs of up to 25 percent on the exports that keep their operations afloat. When they do, they aren’t going to remain silent.” Farmers for Free Trade says these tariffs are not only a blow to U.S. farmers, it’s a win for our competitors. When American corn and soybeans become more expensive, South America wins.

When American beef becomes more expensive, Australia wins. As this trade war drags on, the group says farmers will rightly question why U.S. competitors are winning while American farmers are losing. Kuehl adds, “Farmers for Free Trade will continue to hold town hall meetings across the country this summer to ensure that farmers voices are being heard. The message will be heard loud and clear. American farmers demand that elected officials support them by ending this trade war.”

The White House announced today that it’s moving forward with 25 percent tariffs on up to $50 billion of Chinese products imported into the U.S. China responded in-kind, saying it will move swiftly to protect its interests. The speculation is Beijing will retaliate by imposing tariffs of its own on $50 billion in American exports, including agricultural products. Iowa Soybean Association President Bill Shipley of Nodaway released the following statement:

“The use of food as a weapon in trade disputes is of grave concern to Iowa and U.S. farmers. It threatens the security and stability of the people and economies of China and the United States, including millions of U.S. farm families.

“There are no winners in a trade war and one that includes soybeans will not start or end well. U.S. soybean prices have already plummeted by about $1 per bushel since the beginning of June. Prices will likely drop further should the tariffs be imposed. This will further pressure agricultural families and businesses already struggling with below break-even commodity prices. Duties on imported soybeans will also negatively impact China’s soy processors, animal and aquaculture producers and its people.

“An ongoing trade dispute with China risks stoking anti-Americanism sentiment that could jeopardize the strength of trade relations between the two countries that have taken U.S. soybean farmers nearly 35 years to develop.

“Iowa soybean farmers recognize the legitimate trade issues involving China and the U.S. We’re also keenly aware of the trade imbalance that exists between the two countries. China consumes nearly 62 percent of all soybeans traded globally. Approximately 33 percent of total U.S. soybean production is destined for China, fulfilling almost 40 percent of China’s total soybean imports. Ironically, U.S. soybean and agriculture can help improve the trade imbalance by increasing sales to China. This is a much better course of action than suspending sales.

“Farmers are resilient, resourceful and used to dealing with situations out of their control. The best way to counteract negative financial impacts of tariffs is to go on offense. The Iowa Soybean Association will continue to work with partners to build demand both here and abroad, find more efficient ways to export our product and ensure policies and regulations are fair and workable for farmers.”

 

Not funded by the soybean checkoff

China says any tariffs implemented on the nation by the United States will dampen the ongoing trade talks between the two.

The Chinese government in a statement said: “All economic and trade outcomes of the talks will not take effect if the U.S. side imposes any trade sanctions including raising tariffs,” according to Politico. China stressed that the outcome of the talks should be based on “meeting each other halfway.” The comments followed last week when the Trump administration said it was ready to move forward with tariffs on $50 billion worth of Chinese goods being imported to the United States.

Meanwhile, in previous trade talks, China has agreed to buy more U.S. agricultural and energy goods. A U.S. delegation also spent two days in China last week to discuss trade issues.