Kentucky soybean farmers monitor China tariff situation
Kentucky’s soybean farmers are busy in the fields this time of year, but that certainly doesn’t keep them from keeping a watchful eye on what’s going on with international trade.
“The unseasonably cool temperatures and excessive rains in the spring have put many farmers behind in our fieldwork,” said American Soybean Association (ASA) Vice-President Davie Stephens of Wingo, “but leaders in ASA and the Kentucky Soybean Association (KSA) continue to stay on top of potential changes to international trade policy, and we are making sure that farmer voices are being heard in Washington, D.C. during this critical time.”
“Trade is vital to the success of U.S. soybean farmers. While the U.S. consumes an abundance of our soybean crop for animal feed, biodiesel and both food and industrial uses, more than half of what we grow – 62 percent – is exported,” he said. “More than half of those exports go to China, and last year that added up to total exports of $27 billion, $14 billion to China. In 1998, we exported $400 million in soybeans to China, and now, 20 years later, our exports are up to $14 billion. A lot of time and hard work went into forming those relationships with our trade partners, and we don’t want to lose those relationships.”
The White House’s recent announcement to impose tariffs under the section 301 Investigation as early as June 15 was of concern to soybean growers. This statement comes on the heels of an earlier announcement that the United States and China had reached a tentative deal that would put a hold on the implementation of tariffs.
Soybean leadership has heard that a component of the negotiations could involve an increase in exports of U.S agricultural and energy products, and both ASA and KSA welcome the opportunity for U.S. agriculture and soybean growers to be a constructive part of the solution to increase exports to China. This news has been dampened as the White House renewed the threat last week to move forward with $50 billion in tariffs on Chinese products.
The Chinese Commerce Department announced several months ago that it could impose new retaliatory tariffs on 106 U.S. goods amounting to roughly $50 billion in imports.
China specifically announced it would impose a 25 percent tariff on U.S. soybeans.
While this threat has not been renewed, we do not expect China to stand down if the U.S. imposes tariffs after June 15.
According to a study conducted by Purdue University, soybean exports to China could drop dramatically if China chooses to impose a 25 percent tariff on U.S. soybeans. The Purdue study projects that China’s soybean imports from the U.S. would fall by 65 percent, total U.S. soy exports would drop by 37 percent, and U.S. soybean production would decline by 15 percent.
China imported $13.9 billion of U.S. soybeans in 2017, 60 percent of total U.S. exports and nearly one out of every three rows of annual soy production. Increasing exports of soybeans and other agricultural products would be a positive way to reduce our trade deficit with China.
Farmer-leaders who represent their peers at the state and national levels are quite vocal in their efforts to encourage lawmakers to rethink the tariffs. ASA recently hosted a fly-in for Hill visits, and ASA, KSA and other soybean producing states’ soybean associations signed on to letters during the comment period for Section 301.
For more info on soybean farming in Kentucky, visit www.kysoy.org.