What was a surprise, was the unexpected announcement that China would also include US soybean exports in the list of items impacted by tariffs, something which we noted earlier opens up the door to a new, third round of tariffs by the US, which would assure that a "Nuclear" trade war has indeed broken out.
It is the presence of soybeans in the tariff list that has startled China watchers and analysts, such as Capital Economics' Julian Evans-Pritchard, who writes that "China's rapid and aggressive response to the proposed US tariffs has raised the stakes for both sides."
Perhaps nothing more than the fact that while China is seeking to hurt US exporters, it will also substantially and materially impair its own domestic producers and supply chains, will struggle to replace U.S. soybean supplies "Inflicting severe financial pain on domestic companies, analysts and executives at feedmakers said" according to Reuters, and potentially risk sparking runaway food inflation as surging feedstock prices send pork prices through the roof.
To be sure, from a trade war perspective the inclusion of soybeans makes perfect sense: for China, the world's top importer of the oilseed in the world, soybeans are considered one of the most powerful weapons in Beijing's trade arsenal because a drop in exports to China would hurt Iowa and other farm states that backed U.S. President Donald Trump.
China's ravenous appetite for soybeans - the country's purchases hit a record last year and China eats up about 60% of globally traded soybeans - is because it needs to feed the world's largest livestock industry including 400 million pigs, which in turn provides food for the world's biggest human population.
There certainly isn't enough production at home: China grows only about 14 million tonnes of soybeans, mainly to make food for human consumption, making it especially reliant on foreign imports, and thus, the US. In short, by crippling US soybean imports, China may have shot itself in the leg.
Which means that the inclusion of soybeans in China's tariff list has changed everything: on one hand it shows that China is dead serious in its retaliation and hopes of hurting Trump supporting farmers; on the other it may have started the countdown on its own spike in pernicious, food inflation, the outcome of which could be social chaos and instability, an outcome which Xi will hardly be excited about but which will be music to Trump's ears as both superpower leaders dig in for what appears to be a period of extended trade trench warfare.
https://www.zerohedge.com/news/2018-04-04/why-chinas-soybean-tariff-changed-everything
It is the presence of soybeans in the tariff list that has startled China watchers and analysts, such as Capital Economics' Julian Evans-Pritchard, who writes that "China's rapid and aggressive response to the proposed US tariffs has raised the stakes for both sides."
Perhaps nothing more than the fact that while China is seeking to hurt US exporters, it will also substantially and materially impair its own domestic producers and supply chains, will struggle to replace U.S. soybean supplies "Inflicting severe financial pain on domestic companies, analysts and executives at feedmakers said" according to Reuters, and potentially risk sparking runaway food inflation as surging feedstock prices send pork prices through the roof.
To be sure, from a trade war perspective the inclusion of soybeans makes perfect sense: for China, the world's top importer of the oilseed in the world, soybeans are considered one of the most powerful weapons in Beijing's trade arsenal because a drop in exports to China would hurt Iowa and other farm states that backed U.S. President Donald Trump.
China's ravenous appetite for soybeans - the country's purchases hit a record last year and China eats up about 60% of globally traded soybeans - is because it needs to feed the world's largest livestock industry including 400 million pigs, which in turn provides food for the world's biggest human population.
There certainly isn't enough production at home: China grows only about 14 million tonnes of soybeans, mainly to make food for human consumption, making it especially reliant on foreign imports, and thus, the US. In short, by crippling US soybean imports, China may have shot itself in the leg.
Which means that the inclusion of soybeans in China's tariff list has changed everything: on one hand it shows that China is dead serious in its retaliation and hopes of hurting Trump supporting farmers; on the other it may have started the countdown on its own spike in pernicious, food inflation, the outcome of which could be social chaos and instability, an outcome which Xi will hardly be excited about but which will be music to Trump's ears as both superpower leaders dig in for what appears to be a period of extended trade trench warfare.
https://www.zerohedge.com/news/2018-04-04/why-chinas-soybean-tariff-changed-everything
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