Soybean group in US calls for trade sense

A lobbying group for the US soybean industry urged the White House on Wednesday to engage Beijing in a more pragmatic manner to avoid economic harm to farmers, as analysts warned of the economic and political implications of the country’s escalating trade standoff with China.

Soybeans, the largest US agricultural export to China, is one of 106 US products on which Beijing considered imposing an additional 25 percent tariff.

The move was announced early on Wednesday following the Trump administration’s proposed tariffs on $50 billion worth of Chinese products.

“A 25 percent tariff on US soybeans into China will have a devastating effect on every soybean farmer in America,” said American Soybean Association President John Heisdorffer. “Soybean farmers lost $1.72 billion in value for our crop this morning alone. That’s real money lost for farmers, and it is entirely preventable,” he said.

Heisdorffer, whose association is a lobbying group representing 21,000 US soybean producers, said there is still time to reverse the damage, as China has said that its extra tariff is contingent on the course of action the US administration takes.

“We call on President Trump to engage the Chinese in a constructive manner — not a punitive one — and achieve a positive result for soybean farmers,” Heisdorffer said in a statement.

The long-term impact of a tariff would be to make US soybeans less competitive with South American soybeans, said Gary Schnitkey, a professor and farm management specialist at the University of Illinois.

Over time, there would be a shift in acreage away from soybeans in the US and a move to South American soybeans, he told China Daily in an email.

Beijing has stressed that the proposed 25 percent tariff is one of the countermeasures it was forced to take. It said it was also out of concern for protecting the interests of Chinese farmers.

US soybeans sold to China account for 62 percent of its total soybean exports. Last year, the US shipped about 33 million metric tons to China, one-third of China’s total imports.

“While US farmers can benefit from healthy SinoUS economic ties, the

export volume to China was too big,” China’s ViceMinister of Finance Zhu Guangyao said on Wednesday in Beijing.

“Chinese farmers have petitioned industry associations, saying that US government subsidies hurt Chinese soybean growers, and China must respect its farmers’ demands.”

Jon Taylor, professor of political science at the University of St. Thomas in Houston, said the trade dispute could still get ugly between China and the US.

He warned of the political repercussions of escalation. For example, the tariff would hurt Iowa, a key in presidential elections.

“If we go into a long, sustained period of low prices, it will impact some farmers’ ability to stay on the farm,” Kirk Leeds, CEO of the Iowa Soybean Association, told the Des Moines Register. Iowa is the top producer of soybeans in the US.

Taylor said managing China-US trade relations is a major challenge facing the Trump administration, which “would be well served by changing its protectionist approach”.

William Zarit, chairman of the American Chamber of Commerce in China, said he hopes Washington and Beijing will not follow through on their “threats”. Instead, they should work toward a “serious negotiation”, The Associated Press reported on Wednesday.

Soybean futures fell as much as 5 percent on Wednesday, their biggest intraday loss since July 2016, and went on to close down by 4 percent.