China may be using US soybeans to hit Trump's political base

Key Points
  • China is using soybeans as a tool to hit President Donald Trump's major supporters, said Jim Sutter of the U.S. Soybean Export Council.
  • Beijing is hoping that farmers will put some pressure on the administration, according to Sutter.
Why China's tariff on US soybeans is a political, not economic, move

Beijing's decision to target U.S. soybeans in its new tariffs is a political maneuver designed to hit President Donald Trump's support base, according to Jim Sutter, CEO of the U.S. Soybean Export Council.

The world's second-largest economy, announced on Wednesday a 25 percent levy on $50 billion in U.S. imports, including soybeans, corn, aircraft, cars and whiskey. That was in response to Washington's decision to impose a similar scale hike on Chinese goods.

The Chinese are looking "where could they have an impact with many people who may have the ear of President Trump ... the farmers are certainly that," Sutter told CNBC's "Squawk Box" on Thursday.

Many farmers supported Trump in the 2016 election, Sutter added, so Beijing saw an opportunity.

"I think [China] wanted to do something that would get the attention of the farmers, and then farmers will put some pressure on the administration," he said. "That's certainly happening."

A soybean field near Salem, South Dakota.
Scott Olson/Getty Images

Soybeans are the top U.S. agricultural export to the communist state and the move has the U.S. farm economy worried about economic ramifications.

But China's economy could also suffer.

The soybean tax might "penalize their feed industry, their oil consumers, their food consumers, almost as much as it could impact negatively U.S. farmers and I don't think [the Chinese] want to do that," Sutter explained.

He said he was cautiously optimistic for negotiations to resolve the matter over the next few months.