Tension between the United States and China remains after months of trade discussions.
President Donald Trump plans to impose the first round of tariffs on the Asian country this Thursday. Will he follow through with his threat? A market analyst shares what he thinks will happen to United States agriculture, regardless of President Trump’s decision.
President Donald Trump plans to impose $50 billion in tariffs Thursday on Chinese goods. Jim McCormick, senior advisor with Allendale, says the move could seriously impact United States agriculture, especially U.S. soybean farmers.
“When President Trump first threatened to do it, China came back and said, ‘If you hit us with those tariffs, we’re going to hit you back with $50 billion in retaliatory tariffs,’” McCormick said. “Specifically for American agriculture, they were going to put a 25% tariff on all U.S. imported beans. I have to believe that if Trump puts the tariffs on, China will follow through just like the Mexicans and European Union has. They will push back against Trump’s tariffs, and I think that would be very negative for American agriculture.”
McCormick adds it is not too late for President Trump to back out of his threat. McCormick believes United States agriculture could see a relief rally in the futures market, if the United States and China can soon come to an agreement.
“U.S. ending stocks for beans, they’re looking at carryouts that are dropping. Corn carryouts down to 1.7; that’s some of the tightest stock use in the world that we have. China is a huge importance to the world,” McCormick said. “Think about it…about 20, 25 years ago, the U.S. total bean production was about 2.2 billion bushels. Here were are, 23 to 24 years later, we export more than we produce. It’s a huge deal. If China commits to buy U.S. beans, it can’t be anything but bullish.”