Chinese importers have already stopped buying U.S. wheat, soybean purchases are expected to drop even further, and the U.S. ag sector is expecting the financial pain to increase exponentially as long as the trade war persists.
The trade war took a major step forward at 12:01 a.m. Friday morning as the U.S. officially began levying new tariffs on $34 billion worth of Chinese goods in President Donald Trump’s effort to stop China from taking U.S. intellectual property as well as reduce the U.S. trade deficit. China responded with new tariffs on $34 billion worth of U.S. goods – mostly a wide range of U.S. agricultural products, ranging from soybeans to cucumbers.
Likely in an effort to avoid the new 25 percent tariff, Chinese importers cancelled in late June purchases of 366,000 metric tons of soybeans for the 2017-18 marketing year, according to the latest U.S. Export Sales Report that the USDA released today. The Chinese also cancelled purchases of 66,000 tons for 2018-19 delivery.
China now buys roughly 30 percent of all the soybeans produced in the U.S., and a recent study out of Purdue University predicts Chinese tariffs would result in a 65 percent cut in U.S. exports.