With President Donald Trump threatening that he’s "ready to go" with tariffs on more than $500 billion in goods from China, there's a possibility Beijing could inflict more pain on U.S. agriculture as part of retaliation, including another round of duties on soybeans.
If China were to add another round of duties on soybeans, it could add pressure on the Trump administration due to the economic importance of soy exports to China. However, the White House may have helped prepare for more pain in the American agriculture sector by rolling out a $12 billion emergency plan for U.S. farmers on Tuesday.
"Nobody is going to win in this trade war," said Bret Davis, an Ohio soybean farmer and a member of the American Soybean Association's governing committee. "We just hope instead of a tariff that we come to an agreement and make it better for our side and their side."
Still, there is precedent for China slapping "double whammy" tariffs months apart on the same U.S. agricultural products. For example, China imposed two rounds of tariffs on pork, nuts and fresh fruit. In the case of pork, after the additional tariff went into effect July 6, "the other white meat" is now subject to an import tax that exceeds 70 percent.
"You've already seen China express ways that they will probably get around soy," said Sam Funk, senior grain and oilseed analyst at Rabobank in St. Louis. The Chinese tariffs have already hit most lucrative sectors of agriculture, from grains and oilseeds to livestock and fresh produce. There have also been duties slapped on items such as dairy, nuts and wine.
If Beijing added a second wave of tariffs on U.S. soybeans, Funk said it could be done without Chinese buyers suffering the imported tax directly, such as by going through state-owned strategic reserves and then releasing some supplies internally. The Chinese government would presumably absorb the tariff, but if there were a double tariff the costs could increase sharply for Beijing.
A report earlier this month from Bloomberg suggested the Chinese government would reimburse buyers for costs of the new import duties, assuming the soybean cargoes are for state stockpiles. It cited unnamed sources for the information.