Import tariffs announced by the Trump administration are threatening to spark a global trade war that could dent the U. S. agricultural market—and soybean prices could suffer the most.
Import tariffs announced by the Trump administration threaten to spark a global trade war that could put a dent in the U. S. agricultural market—and domestic soybean prices could suffer the most.
U. S. trading partners world-wide have threatened to retaliate against tariffs on steel and aluminum and have voiced similar sentiments about previously announced import tariffs on residential washing machines, as well as solar cells and modules, earlier this year.
While China could pose the biggest threat to soybean prices, Canada and Mexico could target a broader array of agricultural products with tariffs. The two nations are exempt from the U. S. aluminum and steel tariffs, but U. S. threats to withdraw from the North American Free Trade Agreement have shaken its relationship with its neighbors, two of the U. S.’s biggest agricultural trading partners for products such as corn, pork, and vegetables. In 2016, U. S. exports of agricultural products to Canada totaled $23 billion, and to Mexico, $18 billion. Mexico is also the second-largest market for U. S. soybeans.
But in the event of an actual global trade war, China may have the best weapon of retaliation in the agricultural market: soybeans.
China “could easily levy their own tariffs on the cost of soybeans,” and since China is among the top U. S. agricultural importers, “such a tax war could create serious problems on domestic soil,” Koos says.
