China will impose a 25% tariff on 545 US products – including soyabeans – on 6 July in retaliation to a similar import tax hike by the US government, spurring fears of a global trade war.
The tariffs on US$34bn worth of goods also covers products such as corn, wheat, beef, pork, poultry, electric cars, orange juice, whiskey, lobsters, salmon and cigars, reported The Globe and Mail on 15 June.
The move came after the Trump administration announced a similar tariff hike on 15 June on US$34bn worth of Chinese good, set to come into effect on the same day as its Chinese counterpart. The USA was also considering a further US$16bn worth of tariffs on other products.
China’s increased taxes on agricultural and food products would have the biggest impact on US rural areas, which were staunch Trump supporters in the 2016 election, said The Globe and Mail.
The news outlet added that Beijing was seemingly targeting products it could easily replace with imports from other countries, such as Australia and Brazil, in order to minimise the impact on its own economy.
China’s Commerce Ministry also said the country had scrapped an agreement to reduce its multibillion dollar trade surplus with the USA by purchasing more US produced farm goods, natural gas and other products.
Davie Stephens, vice president at the American Soybean Association, told World Grain on 15 June that the tariffs could have devastating consequences for US farmers.
“Crop prices have dropped 40% in just the last five years and farm income is down 50% compared to 2013.
“A recent study by Purdue University economists predicts that soyabean exports to China could drop by a whopping 65% if it imposes a 25% tariff on US soya. As a soya grower, I depend on trade with China – it imports roughly 60% of total US soyabean exports,” said Stephens.
The latest turn in the trade spat between the two economic giants was due to the Trump administration’s insistence on narrowing the trade gap between the countries and opposition to China’s plans to develop its technology sector.
According to the EU, Japan and the USA, China employed unfair tactics in its policy regarding the technology industry – in some case allegedly resorting to outright intellectual property theft – that violated its commitments under the World Trade Organization, wrote The Globe and Mail.