Over $30 billion in new trade tariffs go into effect today. What impact will they have on agriculture? The anticipation of the Tariffs that are scheduled to go into effect on Friday have driven soybean prices sharply lower. Purdue Ag economist Chris Hurt said there had been hopes our trade issues with China and NAFTA nations would have been resolved by this day, but that was not the case. As a result, effective today U.S. soybeans in China have increased in cost by $3 a bushel. Hurt stated, “It prices us out of the market.” In a recent Purdue webinar, Hurt said that China will still buy some soybeans from the U.S., “We are too big of a customer for them, but we will be the last place they buy from. In short, we will become a residual supplier.”
Purdue economist Michael Langemeier says, as a residual supplier, the U.S. will over time lower soybean production, “This will stimulate more soybeans acres in other nations and reduce soybean acres in the U.S. I think the era of soybeans being more profitable than corn in the U.S. is over.” U.S. soybean acreage has been increasing in recent years especially in the Eastern Corn Belt, because of good profitability.
Brent Bible soy and corn producer in Romney, Indiana, said the trade war is directly impacting his bottom line, “For soybean producers like me, this is a direct financial hit. This is money out of my pocket. These tariffs could mean the difference between a profit and a loss for an entire year’s worth of work out in the field, and that’s only in the near term. Over the long haul, soybean producers are deeply concerned that China will continue to substitute American soy with soy from our global competitors. The losses these tariffs represent can’t and shouldn’t be made up by government programs. Frustration is growing quickly in the heartland, we need this solved now.”
U.S. agriculture is being impacted by more than just our trade war with China. AFBF trade specialist Dave Salmonsen said many processed food products will be effected by tariffs from Canada and the EU, “Pizza, yogurt, chocolate, orange juice, beer and whiskey. For ag products, that’s what we’re seeing 25 percent retaliatory tariffs start up from Canada. The European Union is also retaliating for the same reason, and, for ag products, they’ve included rice and cranberries, peanut butter, kidney beans, also whiskey, and that’s also going to be 25 percent tariffs. Mexico has done things in two levels. In June, they put 10 percent tariffs including pork, cheese, apples, and whiskey. Here in the beginning of July, they’re going to up that to 20 percent.”
Salmonsen’s advice for farmers: watch and wait, “Watch this closely. Make sure that other people, we always say your congressmen and senators, when you have the chance, know what the current effects are if you’re being affected, or what potential effects are going to be down the road on you.”