Trump Tariffs Spark China Retaliation on US Agricultural Exports

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China will impose tariffs on a slew of US farm products as part of its countermeasures against Washington, threatening to disrupt a major portion of trade between the two agricultural powerhouses.

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While the full list of measures from Beijing on Tuesday indicated some restraint, the breadth of farming targets was far-reaching, touching commodities from beef and poultry to grains. China also announced a complete suspension of soybean imports from three US entities and halted purchases of American logs.

The government warned earlier in the week, through the state-run Global Times, that agricultural products would be caught in trade crossfire. Its latest moves include additional 10% duties on imports of soybeans starting March 10. Sorghum, pork and beef will also incur new 10% tariffs, while 15% levies will be slapped on US chicken, wheat, corn and cotton, according to a statement.

“It’s a negative for pork and beef, but China wasn’t going to buy much corn or soybeans from us for the next six to eight months anyway,” said Arlan Suderman, chief commodities economist at StoneX. “Argentina and Brazil’s supplies are cheaper, thanks for foreign exchange rates, and that will likely be the case until those supplies run out late this year.”

China’s retaliation, which includes some of America’s most valuable agricultural exports to the Asian nation, comes as the US raised tariffs on China to 20% and introduced 25% duties on most Canadian and Mexican imports. 

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Canada also hit back at President Donald Trump, retaliating against about $107 billion worth of US products, including a wide range of food products from meat and dairy to candy. Mexico plans to make an announcement on Sunday.

Soybean futures for May delivery fell as much as 2% to $9.91 a bushel, the lowest for a most-active contract since January. China is the world’s largest buyer of the commodity, used to make cooking oil and animal feed.

Corn for the same month fell as much as 3% to $4.425 a bushel, the lowest for a most-active contract since December. Wheat also declined, while cotton futures in New York slumped as much as 4.5% to the lowest since the height of the pandemic in 2020.

Agricultural markets were caught in the crosshairs of the US-China trade war during Trump’s first term, with Beijing imposing tariffs as high as 25% on American farm products including soybeans. US soybean sales fell almost 80% during a two-year period. 

This time around, though, China has diversified its purchases and it can mostly live off soybean imports from South America. There’s also very little in outstanding sales of US soy that’s still to be shipped to China, according to data from the US Department of Agriculture. Some of these sales could be canceled.

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“I anticipate that we’ll see a few cargoes dropped at some point to get some headline impact,” Suderman said. “But there is only about 1 million tons of unshipped soybeans still on the books at this point.”

Cargoes shipped before March 10 and imported before April 12 won’t incur the additional tariffs, according to the Chinese government statement. 

“China will be able to reach a new supply-demand balance, by, for example, importing more soybeans from South America, or releasing supplies from the reserves,” said Hanver Li, chief analyst with Shanghai JC Intelligence Co. “China had been making preparations long ago. China is ready for this.”

During Trump’s first term, the White House was forced to give farmers generous payouts as levies escalated and crop exports shrank, helping to maintain his support in rural areas. That could happen again.

Growers have already been grappling with falling crops prices, with farm income under pressure for the last three years. The cost of seeds, fertilizer and equipment have also gone up, while tariffs on imports on Canadian potash won’t make things any better.

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On Sunday, US Agriculture Secretary Brooke Rollins said that American farmers would soon start receiving an initial tranche of $30 billion in funding approved by Congress to fight a market downturn. That funding was approved under the Biden era, before tariffs were even an issue.

“This doesn’t look like a full-scale trade war just yet, but it could be heading that way,” said Kang Wei Cheang, an agriculture broker at StoneX in Singapore. “China’s actions suggest they want to keep things from spiraling out of control, but the real question is whether the US is willing to negotiate. If no deal is reached, this could drag out into a much larger economic conflict.”

During the last trade war, the US and China eventually reached the so-called Phase 1 trade deal, under which China pledged to buy more American agricultural products. Beijing has since taken steps to increase purchases from South America and elsewhere, and to boost domestic production. At this time of year, it is mostly buying from Brazil.

The US said on Monday that it would impose tariffs on “external” agricultural products starting on April 2, adding another layer of threats to impose trade barriers on imported goods. The move comes just as the nation’s food imports balloon, driving the agriculture trade deficit to a record $49 billion this year.

“I really don’t know how raising tariffs would help the US corn and soybean farmer unless tariffs produced a new Phase 1 deal like Trump signed with China in 2020,” said Dan Basse, president of consultants AgResource Co. “Such a deal would completely change the US ag outlook from bearish to bullish, but seems to be a ways off, if at all possible as China diversified suppliers in the past four years.”

—With assistance from Megan Durisin and Ilena Peng.

(Updates with analyst comment, more background beginning in fourth paragraph.)

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