(This article was updated to include information about a new sale of soybeans to undisclosed destinations.)
SALEM, Ohio — A trade dispute with China escalated last week with China’s announcement April 4 of a proposed 25 percent tariff on imported U.S. soybeans.
Last year, the United States sold $12.4 billion in soybeans to China — nearly 60 percent of all U.S. soybean exports. According to the Ohio Development Services Agency, Ohio’s $1.8 billion in soybean exports in 2017 accounted for more than 3.5 percent of all Ohio commodity exports.
China’s tariff threat is the latest move in an ongoing back and forth with China that began March 8 when President Donald Trump imposed 25 percent tariffs on imported steel and a 10 percent tariff on imported aluminum from most countries, including China.
US response
On April 5, President Trump ordered the U.S. trade representative to consider imposing tariffs on up to $100 billion worth of Chinese products. Those duties would come on top of the $50 billion in products the U.S. has already targeted.
The Trump administration has said it is taking action as a crackdown on China’s theft of U.S. intellectual property.
The U.S. bought more than $500 billion in goods from China last year and now is planning or considering penalties on some $150 billion of those imports.
The U.S. sold about $130 billion in goods to China in 2017. China has proposed tariffs of $50 billion on those U.S. products.
Farm country will feel it
Sen. Charles Grassley, an Iowa Republican, says the United States needs to protect its intellectual property and competitiveness, but shouldn’t force farmers to bear the brunt of retaliation for the entire country.
“It’s not fair, and it doesn’t make economic sense,” Grassley said in a statement. “The administration knew that if it imposed tariffs on Chinese goods, China would retaliate against U.S. agriculture. I warned President Trump as much in a White House meeting in February.”
Zippy Duvall, president of the American Farm Bureau Federation lobbying group, warned that the dispute has “placed farmers and ranchers in a precarious position.”
“We have bills to pay and debts we must settle, and cannot afford to lose any market, much less one as important as China,” Duvall said.
American Soybean Association President John Heisdorffer said the tariff will have “a devastating effect on every soybean farmer in America.”
Hits close to home
China is Ohio’s most important soybean export market, so a tariff on American soybeans likely would drive down crop demand and the price Ohio farmers receive for the crop, said Ian Sheldon, an agricultural economist with The Ohio State University’s College of Food, Agricultural, and Environmental Sciences.
“This is obviously going to hurt farmers,” Sheldon said.
Across the United States, about one in every three rows of soybeans grown is exported to China, said ag economist Ben Brown, who runs Ohio State’s farm management program.
“The soybeans that don’t get sold to China are going to need a buyer somewhere,” he added.
Some of those buyers have already surfaced, as Reuters reports 458,000 tonnes of U.S. soybeans were sold to undisclosed destinations last week. The article cited traders who claimed the destination were soybean processors in the European Union, specifically the Netherlands and Germany.
Long-term impact
It’s unclear if or when China will follow through on the threat of 25 percent tariffs on American soybeans in China. But if the country does follow through, and American soybean prices in China go up, other countries could step up to supply more soybeans to China, and they could be sold cheaper without the tariffs.
In the long term, that could cause the United States to permanently lose a significant share of the soybean market, said Ohio State’s Sheldon.
“U.S. farmers may not be able to grab that market share back,” he said.
Planting decisions
Typically, soybeans aren’t planted until early May in Ohio, so farmers still have time to change their mind about how much of the crop to plant — although most of their seed is already purchased.
Ohio State ag economist Barry Ward said the tariff isn’t likely to trigger dramatic shifts away from planting soybeans.
“…producers know that lots of things can change between now and harvest,” Ward said.
(All rights reserved. AP contributed to this report.)
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