China’s retaliation on Friday against new US tariffs should accelerate Beijing’s movement towards alternative agricultural suppliers, including Brazil, a change that began during the commercial war of President Donald Trump’s first term.
Beijing revealed a series of countermeasures, including additional 34% rates on all US products, which add up to 10-15% tariffs on about $ 21 billion in agricultural trade in early March.
“It’s like closing all US agricultural imports. We’re not sure if any imports will be feasible with the 34%tariff,” a trader from a Singapore -based international trade company selling oil and oilseeds to China.
“The main impact will be in products such as soy and sorghum. It won’t be so much about wheat and corn, as China has not bought much wheat and US corn this year,” the trader added.
A European grain merchant said the European Union, which also promised retaliation, will probably also apply tariffs on US soy.
“It’s all a matter of soybeans. A big concern is if there is no deal before the new US soybean crop,” the trader said in reference to the US harvest in the second half.
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“As a general conclusion, all this trade war is ‘bassist’ for US agricultural products and ‘Altista’ for other origins,” said Trader.
March rates accelerated the removal of US soy imports and transferred demand to Brazil, where an abundant crop puts the country on the right track to deliver a record increase in imports to China in the second quarter.
“Brazil will be by far the main beneficiary, the largest supplier that can replace US soybeans to China. But others can also benefit, including Argentina and Paraguay. Regarding wheat, Australia and Argentina should benefit,” said Carlos Mera, Rabobank’s chief of agricultural market research.
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Sol Arcidiacono, a grain sales chief in Latin America at HedgePoint Global Markets, said the South American soy prizes will be stronger throughout the year, despite seasonality and record harvests as the trade war intensifies.
She added that current geopolitics will probably boost an increase in soy -planted area, especially in Brazil, where expansion has slowed lately.
The day before, the awards in Brazilian ports for soybeans fired, signaling greater demand for Brazil’s product, with the market preparing for a counterattack from China.
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On Wednesday, Trump released a 10% basic rate on all imports from April 5 and higher rates on some other countries, including 34% over China, leading the global trade war to a critical point.
China remains the largest market for US agricultural products, but imports of US agricultural products have fallen for the second year in a row, dropping from US $ 42.8 billion by 2022 to $ 29.25 billion by 2024.
Also on Friday, China suspended C&D Sorghum Import Qualifications (USA) Inc., which is Chinese owned, citing phytosanitary problems.
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China has suspended chicken and bone meat import qualifications from American Proteins, Mountain Farms of Delaware and Darling Ingredients.
In addition, it has suspended imports of Mountain Farms of Delaware and Coastal Processing products.
