U.S. Soybeans Still Aren't Selling, Despite Competitive Market
Chinese buyers can purchase soybeans from U.S. and South American producers for about the same price—even with retaliatory tariffs placed on American beans. So why are U.S. sales lagging behind?
After President Trump levied tariffs on Chinese steel and aluminum early this year, the Chinese government struck back with duties on U.S. imports like soy beans. Domestic prices took a tumble, but speaking at an agricultural policy conference Friday, Ohio State researcher Ben Brown explains federal dollars softened the blow for farmers in the short term.
“Farm revenue is actually higher than what it was, even though prices really declined,” he says. “So the lesson here maybe is to take some of this that we’re making this year and save it for next year when we’re not expecting some of these government payments.”
Meanwhile, drought conditions in South America kept their supplies low and prices high. Brown says that puts the producers on even footing when it comes to cost.
"It's not the Chinese government that's buying soybeans, it's individual companies in China, but they're not doing it,” he says. “They could buy soybeans sometimes cheaper at the United States, and pay the tariff, than what they can from Brazil, and they're just not doing that."
Brown notes it’s not clear what’s driving those decisions, but he and other speakers at an Ohio State agricultural policy conference note the Chinese government could be leaning on buyers.
"It's not a centrally planned economy,” says agricultural economist Ian Sheldon, “but it's one where the Chinese government has a lot of power to dictate economic outcomes. I think they are probably stepping in and discouraging imports."
Sheldon argues there are legitimate complaints with China’s trade practices, pointing in particular to intellectual property theft. But he says tariffs are the wrong tool to address Trump’s concerns about the U.S. trade deficit.
“Unless tariffs cause American consumers to change their savings and consumption behavior, it’s not going to change,” Sheldon says. “So the reason focusing on the U.S./China thing ignores the fact that we’re running a deficit with the whole of the global economy.”
He says trade policy will only divert consumption to other countries.