Threat of Tariffs on US Soy Exports to China Still Looms
US agricultural producers and global commodity markets continue to be roiled by uncertainty over threatened Chinese tariffs against US agricultural products. On May 17, China dropped its investigation into US sorghum exports, previously targeted by a 178.6 percent deposit, in advance of forthcoming Chinese antidumping duties.
This came as a relief to US sorghum growers, who are heavily dependent on the Chinese market. In 2017, China accounted for more than 81 percent of all US sorghum exports.
The fate of soy—the biggest US agricultural export to China—remains uncertain. After the United States proposed trade enforcement action against Chinese IP and tech transfer policies, as documented in the USTR’s Section 301 report, China threatened to impose a 25 percent tariff on US exports worth about $50 billion, including on major US agricultural products such as soybeans, cotton, and corn. If soybeans are targeted, the impact on US farmers would be significant. In 2017, the United States exported $12.4 billion worth of soybeans to China, which accounted for over 63 percent of all US agricultural exports to China and 9.3 percent of US goods exports to China overall. That same year, China imported $39.7 billion worth of soybeans.
China is vulnerable to supply disruptions—in 2017, China’s soybean imports were nearly seven times larger by volume than domestic production (95.6 million tons vs. 14.3 million tons). As a result, China has been diversifying its sources of soybeans. Shortly after the Section 301 report was released in April, China ceased purchases of US soy, switching to supplies from Brazil and Canada. Cofco, China’s massive state-owned agribusiness, reportedly started expanding its presence in Brazil, hiring for its team that purchases and stores crops. At the same time, Russia’s agriculture agency Rosselkhoznadzor reported China tripled its purchases of Russian soybeans.
In a joint statement issued by the United States and China on May 19, China promised to “significantly increase purchases of United States goods and services,” with both sides agreeing on “meaningful increases in United States agriculture and energy exports.” Following the publication of this statement, Reuters reported the Chinese government directed Sinograin, a state-owned manager of grain reserves, to resume purchases of US soy, although the Ministry of Commerce denied it had issued any such directive. Meanwhile, Chinese traders built up huge stockpiles of Brazilian soybeans, while governments in several Chinese provinces issued urgent directives to local farmers to step up soy planting.
South Carolina Ports Authority Continues Growth Pattern