ASSESSMENTS

Tariffs on U.S. Soy Will Strengthen Brazil's Hand in the Chinese Market

Jul 20, 2018 | 09:00 GMT

Workers load imported soybeans onto a truck at a port in Nantong in China's eastern Jiangsu province. Chinese soybean stocks are at a 10-year high, which could help China absorb the loss of U.S. imports brought on by tariffs.

Workers load imported soybeans onto a truck at a port in Nantong in China's eastern Jiangsu province. Chinese soybean stocks are at a 10-year high, which could help China absorb the loss of U.S. imports brought on by tariffs.

(AFP/Getty Images)

Highlights

  • In the short term, China remains in a stronger position than the United States in terms of the soy market, with numerous alternative suppliers and substitutes for U.S. product available.
  • Still, the large share of the Chinese market held by U.S. soybean exporters means that Beijing likely will be unable to shut off all U.S. soy imports.
  • Tariffs will accelerate an existing trend that has led to increasing Brazilian soy exports to China.

U.S. farmers could soon start to feel the sting of the White House's trade battles, especially as the fallout from its skirmishes with China begins to hit. Tariffs imposed by Beijing in retaliation for those slapped on Chinese goods by the United States include a 25 percent levy on soybeans, a key import. The world's second-largest economy is also its largest soybean importer, but China appears well positioned to weather the higher prices that tariffs have brought. In the end, higher prices for U.S. soybeans could accelerate changes already occurring in the Chinese market, eroding U.S. market share and spurring China to further increase domestic production of the crop....

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