U.S. and China Vote to Increase Tariffs
The United States escalated a tariff war with China on Friday by hiking levies on $200 billion worth of Chinese goods amid last-ditch talks to rescue a trade deal.
Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin talked for 90 minutes on Thursday and were expected to resume efforts on Friday to rescue a deal that could end a 10-month trade war between the world's two largest economies.
With negotiations in progress, U.S. Customs and Border Protection imposed a 25% duty on more than 5,700 categories of products leaving China after 12:01 a.m. EDT on Friday.
Seaborne cargoes shipped from China before midnight were not subject to the new tax as long as they arrived in the United States prior to June 1. Those cargoes will be charged the original 10% rate.
The biggest Chinese sector affected by the latest tariff increase is a $20 billion-plus category of internet modems, routers and other data transmission devices, followed by about $12 billion worth of printed circuit boards used in a vast array of US-made products.
What It Means for the U.S. Farmer: An interesting week for the on-going negotiations between the U.S. and China as the rhetoric about Chinese non-compliance has translated into actual policy. At FBN we think that the recent developments are not productive and increasing the costs of imports is a negative for the U.S. consumer. Absent any itemized list from the Chinese, we believe that U.S. agriculture products will be largely immune from any further Chinese tariffs.
Chinese Soybean Production to Hit Highest Level in 14 Years
China expects its soybean output to hit the highest level in 14 years during the 2019/20 crop year that is supported by a centrally planned national strategy to revitalize the nation's production of the oilseed.
The Chinese Agricultural Ministry estimates that China will produce 17.27 MMT of soybeans in the 2019/20 crop year, +7.9% YoY.
The estimated production increase would be the largest soybean production since the 2004/05 crop year when China harvested 17.4 MMT of soybeans.
What It Means For The US Farmer: China’s decision to increase domestic soybean production is not a surprise policy shift to us at FBN. Given the protracted trade war between the U.S. and China, China has been actively seeking ways to diversify their global agricultural supply chain. We believe that increasing domestic soybean production can reduce import demand which can be a negative for the U.S. and the global soybean producer.
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