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April 5, 2018
China Imposes Tariffs on Various Ag Commodities, Possibly Soybeans

In response to the Trump Administration’s tariffs on imported steel and aluminum, China said it would consider levying an additional 25 percent levy tariff on around $50 billion of U.S. imports including soybeans, automobiles, chemicals and aircraft. This is in addition to a 15 percent tariff already  applied to various types of fruits, nuts, and wine with a 25 percent tariff placed on pork products.  

China is the second largest purchaser of U.S. farm goods. Additionally, the U.S. shipped more than $1 billion in pork products to China last year, making it the No. 3 destination for exports after Japan and Mexico. The Chinese government issued a statement saying it was imposing the duties "in order to safeguard China's interests and balance the losses caused by" the steel and aluminum tariffs, which took effect late last month.

Roughly 62 percent of U.S. soybean exports go to China, more than $12 billion a year according to the U.S. Department of Agriculture. Less than 1 percent of U.S. corn exports go to China.

A study from Purdue University found that tariffs could cut U.S. soybean exports by as much as 71 percent. The study was commissioned by the U.S. Soybean Export Council and modeled the effects of Chinese tariffs ranging from 10 percent to 30 percent. A more modest 10 percent tariff would cause exports to drop by 33 percent, leading to an 18 percent decline in total soybean exports, the study found.

U.S. soybean production is near record levels, with farmers forecasted for the first time in decades to plant more soybeans by acreage compared to acres of corn, according to the USDA.  

The implementation date of China’s retaliatory tariffs depends on the outcome of bilateral negotiations, and the U.S. decisions, Deputy Finance Minister Zhu Guangyao told reporters after a news conference in Beijing. “We believe both countries have the ability and wisdom to address the problem,” Zhu said.

U.S. Commerce Secretary Wilbur Ross said China’s response isn’t expected to disrupt the U.S. economy. In an interview on CNBC on Wednesday, he said China’s reaction “shouldn’t surprise anyone,” as it’s proportionate to the U.S. action. He said the U.S. isn’t entering “World War III" and left the door open for a negotiated solution.

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This newsletter is intended for NAAA members only. NAAA requests that should any party desire to publish, distribute or quote any part of this newsletter that they first seek the permission of the Association. The views, thoughts, and opinions expressed herein do not necessarily represent those of the National Agricultural Aviation Association (NAAA), its Board of Directors, staff or membership. Items in this newsletter are not the result of paid advertising and are only meant to highlight newsworthy developments. No endorsement by NAAA is intended or implied.
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