China to impose extra tariffs of 10%-15% on various US products
Business
Tariff on US soybeans will hike costs and reduce US imports, leading China to import it from Brazil
(Reuters) – China on Tuesday swiftly retaliated against fresh US tariffs, announcing 10%-15% hikes to import levies covering a range of American agricultural and food products, and placing twenty-five US firms under export and investment restrictions.
COMMENTS:
LIU JINLU, AGRICULTURAL RESEARCHER AT GUOYUAN FUTURES, BEIJING
"This news has raised concerns about tightening domestic agricultural supplies, benefiting the sector. China’s 10% tariff on US soybeans will increase costs and reduce US imports, leading China to boost imports from Brazil and other countries.
"However, South America, especially Brazil, is approaching its soybean export limit after years of growth (2024 exports are expected at 96 million tons). Currently in the harvest season, Brazilian soybeans have not yet arrived in large quantities at Chinese ports but are expected in Q2. With the additional US tariffs, the already tight soybean stock will become even more strained."
GENEVIEVE DONNELLON-MAY, RESEARCHER AT OXFORD GLOBAL SOCIETY, MELBOURNE
"While the new tariff announcement is not as heavy as the 25% in 2018, it does target many of the same agricultural products. In addition, the 10% tariff may provide Beijing with the opportunity to increase the tariffs on US agricultural goods by another 10% or even 20% in the coming months and years.
"Soybeans were considered a weak link during the first Trump administration but Chinese policymakers have learned lessons from that time and are, in theory, much better prepared, due in part to Beijing's food import diversification strategy."
WANG ZHUO, PARTNER AT HEDGE FUND ZHUOZHU INVEST, SHANGHAI
Raising tariff on China "will likely hurt the US itself as it needs cheap Chinese products to bring down inflation. Higher tariffs on US agriculture products will also negatively impact China", but countermeasures are politically necessary. "So, it would be wise to make some symbolic move without triggering an escalation in tensions."
DENNIS VOZNESENSKI, ANALYST, COMMONWEALTH BANK, SYDNEY
"Chinese tariffs on US wheat and corn imports should be supportive for demand for Australian wheat and barley exports. However, China's recent slowdown in imports of feed grains from all origins should temper the excitement."
WAN CHENGZHI, ANALYST, CAPITAL JINGDU FUTURES, DALIAN CITY
"Considering that China's peak import period for US soybeans has already passed, the impact of these countermeasures on the total volume of US soybean imports is limited. Any price increases in the future are likely to be more of an emotional market response."
OLE HOUE, DIRECTOR OF ADVISORY SERVICES, IKON COMMODITIES, SYDNEY
"It is broadly negative for US agricultural markets. It is going to have a bearish influence on prices. There are enough corn and soybean supplies in the world for China to make the switch, it is more of an issue for the US, 30% of US soybeans still go to China."
EVEN PAY, AGRICULTURE ANALYST, TRIVIUM CHINA
"It's notable that Beijing's response is restrained. Trump has now imposed a total of 20% tariffs on all Chinese products. China's tariffs impact a limited number of US products, and remain below the 20% level. This is by design. China's government is signalling that they do not want to escalate, they want to deescalate.
"It's fair to say we're in the early days of Trade War 2.0. There's still time and space to avoid a protracted, entrenched trade war if Trump and Xi can strike a deal."
ROSA WANG, ANALYST, SHANGHAI-BASED AGRO-CONSULTANCY JCI
"From the supply and demand perspective, the short-term impact on the domestic market won't be significant. The reasons are: 1. It is currently the South American soybean season, while the US soybean is in the off-season; 2. The amount of US soybeans purchased by China has decreased, and the proportion of US soybeans in China's soybean imports has dropped to 17%.
"However, the large number of products involved this time will add further difficulties to China's aquatic product exports to the US, especially tilapia exports. With the additional 10% tariff, the tariff on tilapia exports to the US will reach 45%, making it basically impossible to export to the US."
