Image used for representation.
Image used for representation.(Photo: The Quint)
  • 1. How Will the Trade War Affect Food Sector?
  • 2. How Will Brazil Benefit from This?
  • 3. Crude Oil to Be Impacted Most?
  • 4. How Will China Replace the Lost US Barrels?
US-China Trade War: What’s at Stake for Food & Energy Sectors

Washington imposed tariffs on $34 billion of Chinese imports on Friday, 6 July, and Beijing has said it will retaliate with punitive measures on US products worth a similar amount, including soybeans, pork and cotton.

The Chinese government had not officially confirmed on Friday afternoon that the retaliatory tariffs had taken effect.

But the tit-for-tat measures have escalated the trade dispute between the world’s two largest economies, and the world’s commodities markets are increasingly embroiled in the bust-up.

The US and China have also issued a second batch of proposed duties on $16 billion of each other’s goods. These would hit US energy exports, such as coal and crude oil, among other areas. It is unclear when these will come into effect.

Below is a detailed breakdown of the markets affected by the tariffs imposed and proposed:

  • 1. How Will the Trade War Affect Food Sector?

    Beijing's tariffs will have the biggest impact on soybeans, the US’ top agricultural export to China in 2017 worth about $12.7 billion, hurting US farmers in states such as Iowa and Texas, which backed Republican President Donald Trump in the 2016 election.

    Buying interest in US beans from China, the world’s top importer of the oilseed, has slowed to a trickle ahead of the tariffs, with one remaining US cargo still heading towards China.

    The vessel, Peak Pegasus, carrying 70,000 tonnes of the US oilseed for state grain trader Sinograin, was due to arrive in the port of Dalian at 5 pm on Friday, just hours after the duties went into effect.

    Some shipments marked for China were due to be loaded from the US Pacific Northwest, and are likely to get sent elsewhere as exporters scramble to avoid paying the tariff, a US trader said.

    In the months ahead though, China will struggle to replace the US beans, forcing processors, which crush the beans to make oil and animal feed, to pay the extra duty or find substitutes.

    Rabobank reckons China may have to buy up to 15 million tonnes of US beans at tariff prices. Crushers may not pass on the inflated cost at least in the short term, further eroding their already low margins, the bank said in a research note.

    Also Read: US-China Trade War: $34 Billion Tariffs on China Kick In

PreviousNext

Follow our Explainers section for more stories.

Also Watch