U.S. agricultural products and the Chinese market
U.S. and Chinese representatives met in China several days ago to discuss the problems connected with trade dispute. However, trade talks ended without any visible sign of progress. The situation further escalated when Donald Trump announced that starting from September, the U.S. would impose additional tariffs. U.S. companies which are exporting various products to China expected a better outcome. Agricultural sector suffered serious financial losses since the beginning of the trade war.
China stopped buying U.S. agricultural products
The conflict between the two countries escalated after Trump’s decision. The most painful news for the U.S. farmer is that China decided to stop buying U.S. agricultural products. According to China’s Commerce Ministry, starting from August 6, Chinese companies won’t buy agricultural products which come from the U.S.
This is a serious issue for American companies, especially for the ones which exported soybeans to China. For example, in 2018, the U.S. exported to China soybeans, dairy, pork, etc. The total value of the soft commodities exported to China was $9.1 billion. Export of agricultural products fell by more than $10 billion in comparison with 2017.
A brief history of the trade war
Trade war started in 2018. China imposed 25% tariff on Soybeans in July of 2018 as a retaliatory measure.
Donald Trump accused China that it was not buying agricultural products in large quantities. This was one of the reasons why Trump decided to apply additional sanctions. However, China’s state, broadcaster CCTV, denied these claims.
They interviewed Chinese official Cong Liang, who said that China kept its word. They provided information about the U.S. soybeans exports to China. According to Cong, two million tonnes of soybeans intended for China are going to leave the U.S. ports in August. He said that another 300,000 tonnes would follow in September.
The situation regarding the U.S. agricultural products is fragile as both sides are unable to come to an agreement. Even before the official statement from the ministry, China used soybeans imported from Brazil and Argentina. This way, they tried to limit the dependence on U.S. imports.
However, it is hard to predict whether China can completely get rid of soybeans imported from the U.S. Rural voters are important for Trump’s presidential campaign. Trump administration should try to solve their problems as soon as possible otherwise he might lose elections.
- Trading Instrument
Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. Subscribe now and receive FREE updates on the market today!