Already facing another year of likely stagnant grain prices, commodity groups are worried how possible trade retaliation could impact demand for U.S. grains and further push prices lower.
On Thursday, President Trump declared he will impose tariffs on imported steel and aluminum from all countries, but China is the biggest exporter of those metals. China is also the biggest importer of U.S.-grown soybeans.
According to the American Soybean Association (ASA), China purchases more than all of our other customers combined, accounting for $14 billion in sales and more than a third of total U.S. soybean production.
“China has indicated that it may retaliate against U.S. soybean imports, which would be devastating to U.S. soy growers. Our competitors in Brazil and Argentina are all too happy to pick up supplying the Chinese market,” said John Heisdorffer, ASA president and Iowa soybean grower.
Trump plans to impose tariffs of 25% on steel imports and 10% on aluminum. Heisdorffer said retaliation from China would add significant further injury to an already-hobbled farm economy.
The National Association of Wheat Growers (NAWG) also expressed deep concern about the potential impact of imposing tariffs. At NAWG’s board of directors meeting this week held at Commodity Classic, directors passed a resolution urging the Trump Administration to avoid imposing national security-based trade barriers on commonly traded products.
“At such an economically hard time for wheat growers, we do not want to see trade barriers brought against us from some of our top customers who are impacted by this decision,” said NAWG President Jimmy Musick, who is also a wheat farmer from Oklahoma.
Last year President Trump ordered an investigation into whether or not aluminum and steel imports posed a threat to national defense. In February, Commerce Secretary Wilbur Ross said imports "threaten to impair our national security," noting, for example, that only one U.S. company now produces a high-quality aluminum alloy needed for military aircraft.
Section 232 of the Trade Expansion Act of 1962 gives the president authority to restrict imports and impose unlimited tariffs if a Commerce Department investigation finds a national security threat.