Soybeans are tumbling as Trump ratchets up trade fight with Beijing

Scott Olson/Getty ImagesSoybean harvest

Soybeans tumbled Tuesday after President Donald Trump threatened additional tariffs on the world’s largest soy importer, raising concerns of retaliatory import taxes that could further target American agricultural products.

Soybeans were down 2.20% to $US8.86 a bushel at 9:15 a.m. ET. Prices have fallen nearly 8% over the last week as import taxes get slapped on the legume.

Trump said Monday his administration could impose additional tariffs on $US200 billion worth of Chinese goods and warned that if Beijing retaliated, another $US200 billion could be targeted. Two rounds of import taxes of that scale, plus the $US50 billion already imposed on China, would bring import taxes on China to $US450 billion – an amount approaching its total exports to the US of $US505 billion.

The move is the latest round of escalations in a trade fight that has dragged on for months. The Trump administration said Friday it would move forward with 25% tariffs on $US50 billion worth of Chinese goods, despite ongoing trade negotiations between Beijing and Washington. Chinese officials quickly pushed back, imposing on the US dollar-for-dollar retaliatory tariffs on 545 categories of US products, including soybeans.

Beijing promised on Tuesday to hit back again. While matching Washington dollar-for-dollar on tariffs seems out of reach – since the US imported $US130 billion in Chinese goods last year – the Chinese Commerce Ministry said they would “launch comprehensive measures that match the US move in quantity and quality.”

In Iowa, a top exporter of soybeans, the prospect of additional hits to the agricultural sector have farmers increasingly nervous. The Des Moines Register’s Donnelle Eller reports that one University of Iowa economist estimates China’s current tariffs on US soybeans could cost farmers in the state up to $US624 billion.

And China isn’t the only major importer the US soybean industry has to worry about. Reuters reported last week that Mexican officials are mulling imposing tariffs on $US4 billion worth of US imports of corn and soybeans. That’s after Trump hit the EU, Mexico, and Canada, with hefty levies on steel and aluminium imports.

Soybeans have shed nearly 12% since March, when the Trump administration announced plans to penalise China for what US officials found in an investigation were “unfair” trade practices, including intellectual property theft.

Screen Shot 2018 06 19 at 9.16.08 AMMarkets Insider

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.