BEIJING, China (DTN) — Chinese officials responded quickly Wednesday to the Trump administration's proposed 25{665a3d7248b9690333c4195c142b942e2311c5bd36bcf4da0d19dbcb5cbdf347} tariffs on $50 billion in Chinese imports by announcing higher tariffs on 106 more U.S. commodities, including soybeans.
The new reciprocal tariffs will be on products including soybeans, automobiles and chemical products, worth a total of $50 billion. Soybeans are at the top of the list.
The Chinese Ministry of Commerce did not indicate when the tariffs would take effect.
According to a USDA Foreign Agricultural Service Gains report Wednesday, the tariffs would hit $16.5 billion in agricultural exports from the U.S., “primarily targeting soybeans, corn and corn products, wheat, sorghum, cotton, beef and beef products, cranberries, orange juice, and tobacco and tobacco products.” Beef, which just got back into the Chinese market last year, was also included, according to the report.
Soybean futures were hit hard by the news, falling as much as 50-plus cents shortly after China's announcement, said DTN Senior Analyst Darin Newsom.
Soybeans were the most vulnerable U.S. grain/oilseed market given China is the world's largest buyer, the U.S. is already looking at potentially massive ending stocks of 740 million bushels at the end of August 2018, and U.S. farmers were likely to plant more than USDA's recently estimated 89 million acres.
“We will have to see where the market stands after the initial dust settles, but with DJIA futures down 550 points, strong computer selling could hit all market sectors, including grain/oilseeds throughout the day,” Newsom said.
As for corn, spillover selling had the market under pressure to the tune of about 16 cents early Wednesday morning. The U.S. market has already seen ethanol exports
“I've said it numerous times, threats to demand are not good business when you continue to increase supplies. And now we find ourselves in what looks to be a full-blown trade war,” Newsom added.
China's action comes after the Trump administration on Tuesday proposed 25{665a3d7248b9690333c4195c142b942e2311c5bd36bcf4da0d19dbcb5cbdf347} tariffs on $50 billion in Chinese imports to protest Beijing's alleged theft of American technology.
Chinese television station CCTV reported that the action by the U.S. “was against the agreement of World Trade Organization (WTO) and had seriously infringed on the legitimate rights and interests of China and threaten the interests of China' development.”
China's announcement said that the implementation date will be determined by how the U.S. government imposes its tariffs against China's
Different departments of the Chinese government had released strong statements against the U.S. government's proposal to impose tariffs on Chinese good.
“China strongly condemns and firmly opposes the U.S. tariff proposals and is ready to take reciprocal measures on U.S. products,” the Ministry of Commerce said in Beijing shortly after the U.S. announcement late Tuesday. The Ministry of Foreign Affairs also denounced the U.S. action as “
News reports in China said that China attaches great importance to the development of China-U.S. economic and trade relations.
“As the largest developing country and the largest developed country, the economies of China and the United States are highly complementary,” one news report said. “Cooperation is the only correct choice between China and the United States. China and the United States should adhere to the principle of mutual respect and win-win cooperation, maintain rationality, strengthen communication, manage and control the differences in a constructive manner, and work together to safeguard the overall stability of China-U.S. economic and trade relations and the authority of the multilateral trading system, which will benefit the peoples of the two countries.”
While soybean prices plummeted in the U.S., the price of
Editor's note: DTN Ag Policy Editor Chris Clayton contributed to this report.
(PS/AG)
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