Published: Mon, July 09, 2018
Finance | By Claude Patterson

US hits China with $34B round of tariffs; Beijing strikes back

US hits China with $34B round of tariffs; Beijing strikes back

President Donald Trump's trade war with China kicked off on Friday, when the United States started applying 25 percent in tariffs on $35 billion worth of Chinese imports and China fired back with taxes on the same amount of US goods.

Minutes later, China's Commerce Ministry issued a statement, saying that "the United States has violated World Trade Organization rules and waged the biggest trade war ever in economic history".

"No way", Riggs said about buying new equipment.

Most-active soybean futures are trading near a two-year low on the Chicago Board of Trade and the cheap price is attracting other buyers. Farmers, we're price takers, not price makers. "So there's only so much we can do".

But, soybean farmers are anxious that if these tariffs stick, they will have far-reaching impacts on the state's economy.

President Trump said that the US tariffs on Chinese goods will take effect just after midnight on Friday in Washington.

Cannatella knows first-hand about the Chinese demand for soybeans.

China is the world's largest importer of soy.

OSA cited an Ohio State University study that suggested these tariffs could lead to a 59 percent decrease in Ohio farmers' net income, and a Purdue University study suggesting total US soybean exports to China could drop by 65 percent.

She calls instead for both countries to negotiate in ways that will "strengthen the competitiveness of our domestic industries" while keeping growth in the agricultural export sector.

"If these tariffs aren't straightened out here within the next month or two, that the economic recession here in Louisiana will be felt by retailers and everything because Louisiana grows 1.3 million acres of soybeans", said Louisiana Soybean Promotion Board Chairman and St. Landry soybean farmer Charles Cannatella. This is the time of year, he said, when Chinese soy product producers switch from American soy to Brazilian soybeans as they are further along in their growing season.

American soybeans are the biggest target of China's retaliatory tariffs but that does not mean soybean farmers have turned against President Donald Trump. "We will not have to hunt our food with pointy sticks", Rob Carnell, chief Asia economist at ING, said in a note.

Underpinning the dispute is Trump's anger at America's $376 billion deficit in goods trade with China. "A lot of the problems recently are that speculators oversold the soybean market".

Steve Hettinger, 55, who farms south of Philo, said that when he hears the word tariff, it never has a good connotation.

The currency market's focus may turn to the US Federal Reserve this week, as any downside risk from tariffs had already been discussed during the June 13 Federal Open Market Committee meeting, according to minutes released last week.

Soybeans are the highest earning crop in Louisiana, earning $680 million dollars in revenue previous year.

That's certainly the way 34-year-old Jason Crider feels.

Trump also said the USA is ready to target an additional $200bn in Chinese imports - and then $300bn more - if Beijing does not yield to U.S. demands and continues to retaliate.

Other farmers also say they still trust the president. Our soil, transportation systems, they're all set up to grow corn and soybeans.

"What else do we do?" he asked. And I'm not going to sell the farm because then I don't have anything.

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