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China cancels US soybean purchases as trade war takes hold

09 July 2018

Is it Smoot-Hawley II, or an economic liberation?

The Commerce Ministry on Friday criticized Washington for "trade bullying" following the tariff hike that took effect at noon Beijing time in a spiraling dispute over technology policy that companies worry could chill global economic growth.

The United States imposed $34 billion in tariffs on Chinese products Friday, and Beijing hit back with its own fiscal punishment and slammed the Trump administration for igniting "the biggest trade war in economic history".

The U.S. has imposed 25 per cent duties on $34 billion United States in Chinese products.

Retaliatory measures "took effect immediately", Chinese Ministry of Foreign Affairs spokesman Lu Kang (陸慷) said. And this year, we have had a lot of great opportunities to hedge and sell soybeans at a good price.

"It's still hard for me to believe the Trump administration could develop and negotiate an overarching package with China that genuinely sticks", Kennedy said.

"In effect, the Trump administration is behaving like a gang of hoodlums with its shakedown of other countries, particularly China", the state-run China Daily newspaper said in an English language editorial on Friday.

Friday's tariffs could just be the opening skirmishes in the trade war, as U.S. President Donald Trump has vowed to hit $450 billion in Chinese goods, the vast majority of imports.

Wilson estimated that $1.4 billion to $1.8 billion in North Dakota soybeans are exported to China annually.

That would bring the total of targeted Chinese goods to potentially $550 billion - more than the $506 billion in goods that China actually shipped to the United States past year.

China lowered commitments to buy 366,000 metric tons of USA soybeans in the season that ends August 31 and cut purchases by 66,000 tons in the following year.

Trump argues that the deficit with China is a problem that has to get resolved now rather than later.

Economists usually agree higher tariffs are counterproductive. If Trump were to realise his ambitions there would be more domestic plants producing goods that China or Europe used to provide, and more jobs created in those plants. Others may not have voted for him but did not vote for Hillary Clinton, opting to write in third-party candidates or leave that part of the ballot blank. He told CNBC that there may be no way to escape a trade war with China.

Other farmers also say they still trust the president. However, I think he's wrong for talking about the trade imbalance. If he has to ruffle a few feathers in the Washington "cesspool" along the way, that suits them just fine.

The increase in reserves came even as the Chinese currency's offshore value deteriorated by 3.3 per cent against the U.S. dollar in June, the biggest monthly decline since 1994 when China pegged the yuan against the greenback.

That may well be true, but it's about to be true for the rest of American consumers too. They would always go to the cheapest place. And where prices don't rise, they may actually collapse when the production that was meant for export ends up getting dumped in the domestic economy instead.

Why Soybeans Are at the Heart of the U.S.

"Imposing 25% tariffs on U.S. whiskeys could put the brakes on an American export success story", Christine LoCascio, senior vice president for worldwide trade at the Council, said in a statement.

That strategy can only last so long, though.

Under the snippy headline " So much trade losing", the lead editorial compared the Trump trade war to the start of Civil War that led to nothing but tragedy for the rebels of the South. "That's the nature of trade wars as well, and while no one is likely to win this confrontation, both sides could certainly lose".

China cancels US soybean purchases as trade war takes hold