Why Soybeans Are at the Heart of the U.S.-China Trade War

Why Soybeans Are at the Heart of the U.S.-China Trade War

China’s newly imposed tariffs against U.S. soybeans herald a major trade shift for a crop that’s soared to prominence in recent decades.

While the Asian nation is targeting a slew of American farm goods in this round of taxes, soybeans are the top agricultural commodity the country imports from the U.S. by far. The oilseed, used to make cooking oil and animal feed, accounts for about 60 percent of the U.S.’s $20 billion of agricultural exports to China. If China retaliates with 25 percent tariffs, American shipments may drop by at least $4.5 billion, according to a study by the University of Tennessee. Brazil, already the world’s biggest soybean shipper, is set to be the biggest winner, filling the gap left by the U.S.

China is the world’s largest soybean consumer and remains heavily reliant on imports to satisfy demand. That’s why the country’s buying habits have an outsize influence on global prices. By imposing the tariffs on U.S. agricultural products, China is targeting one of the few sectors of the American economy that runs a trade surplus at a time when net farm income is poised to fall to a 12–year low. Soybeans are one of the largest U.S. goods exported to China—trailing just civilian aircraft and motor vehicles by value this year, Bloomberg Intelligence analysts Alvin Tai and Chris Muckensturm said in a report.

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