China Sets a 50% Tariff on U.S. Goods
The following is from Ryan Hanrahan, farm policy news editor for the University of Illinois.
NBC News' Peter Guo reported that "China said Tuesday it will 'fight to the end' if President Donald Trump imposes an additional 50% tariff on Chinese goods as many countries rush to negotiate trade with the United States."
"If the plan is fully implemented, the total tariffs on goods imported into the United States from China would be as much as 104%. In response, the Chinese Commerce Ministry said China 'firmly opposes' Trump's tariff threats, calling its previous countermeasures 'entirely justified,'" Guo reported. "Trump threatened the new 50% duty on China, effective Wednesday, if Beijing does not withdraw its 34% tariffs on all U.S. goods by Tuesday, which China imposed in retaliation for a 34% levy on Chinese goods the Trump administration announced last week."
"'Additionally, all talks with China concerning their requested meetings with us will be terminated!' Trump wrote Monday on Truth Social. 'Negotiations with other countries, which have also requested meetings, will begin taking place immediately,'" Guo reported. "Beijing's retaliatory tariffs are scheduled to take effect Thursday."
CNBC's Anniek Bao reported that "as risks of an intense U.S.-China trade war rise, Beijing might resort to further retaliatory measures, such as stopping purchases of U.S. agricultural goods, matching U.S. tariffs and further expansion of export controls on metals and minerals, Xu added."
"Beijing has already placed export curbs on key rare earth elements, prohibited exports of dual-use items to a dozen of U.S. entities, U.S. firms to its 'unreliable entities list,' subjecting them to broader restrictions while operating in China," Bao reported. "The People's Bank of China on Tuesday set the midpoint rate for onshore yuan at 7.2038 per dollar, the weakest level since September 2023, according to data provider Wind Information. The yuan is allowed to trade within a 2% band of this midpoint rate."
"The yuan's weakening is a 'big signal,' Robin Brooks, senior fellow at Brookings Institution told CNBC's Squawk Box Asia, 'this is Beijing politely saying this is getting a little too much, we are putting you on notice, we can devalue if we want and bigger things may come if you keep this up,'" Bao reported. "'This is a clear shot across the bow of Washington,' Brooks added."
"Yesterday, China issued retaliatory tariffs of 34%, on top of their already record-setting tariffs, non-monetary tariffs, illegal subsidization of companies, and massive long term currency" Trump in a past on Truth Social Post.
NBC News' Guo reported that "China will hit back at Trump with the same 50% duties if he proceeds with his threat, said Andy Xie, an independent economist in Shanghai. 'If Trump wants to take you to hell, you take him with you,' Xie said of China's possible response in a phone interview Tuesday."
"Xie said he thinks Beijing has concluded that compromise will only lead to more pressure from Trump. 'China cannot back down anymore,' he said," according to Guo's reporting.
Reuters' Ella Cao and Naveen Thukral reported that "China's retaliation on Friday against new U.S. tariffs is poised to accelerate Beijing's move towards alternative suppliers for agricultural goods including Brazil, a shift that began during the trade war of U.S. President Donald Trump's first term."
"'This is going to cost the U.S. a lot of export business,' Jack Scoville, vice president of the Chicago-based Price Futures Group, said. 'We're pissing off everybody. That's the problem. Where are we going to turn if we've slapped everybody with tariffs?'" Cao and Thukral reported. "'It is like shutting down all U.S. agricultural imports. We are not sure if any imports will be viable with 34% duty,' said a Singapore-based trader at an international trading company which sells grains and oilseeds to China."
"The March levies have accelerated a pivot away from U.S. soybean imports and shifted demand to Brazil, where a bumper harvest puts it on track to deliver a record-breaking second-quarter import surge for China," Cao and Thukral reported. "China remains the largest market for U.S. agricultural products, but imports of U.S. farm goods dropped for the second consecutive year, falling to $29.25 billion in 2024 from $42.8 billion in 2022."
Retaliatory Tariffs Put into Effect
The following is from Ryan Hanrahan, farm policy news editor for the University of Illinois.
CNBC's Ruxandra Iordache reported that "China's finance ministry on Friday (April 4) said it will impose a 34% tariff on all goods imported from the U.S. starting on April 10, following duties imposed by U.S. President Donald Trump's administration earlier this week, according to state news outlet Xinhua."
"'China urges the United States to immediately cancel its unilateral tariff measures and resolve trade differences through consultation in an equal, respectful and mutually beneficial manner,' Xinhua cited the finance ministry as saying in a Google-translated report," Iordache reported.
"The ministry further criticized Washington's decision to impose 34% of additional reciprocal levies on China—bringing total U.S. tariffs against the country to 54%—as 'inconsistent with international trade rules' and 'seriously' undermining Chinese interests, as well as endangering 'global economic development and the stability of the production and supply chain,'" Iordache reported.
Bloomberg's Josh Xiao and James Mayger reported that "tensions between Washington and Beijing have worsened since Trump returned to the White House in January. Notably, the U.S. president has yet to speak with his Chinese counterpart more than two months after his inauguration. They are also locked in a stalemate over China's alleged role in the flow of fentanyl into America, which Trump cited as a reason for the previous two rounds of tariffs."
"Before Wednesday's (April 2) announcement, the tariff imbalance between the U.S. and China was stark: American duties on Chinese goods towered over the tariffs China charges the U.S. China's average tariff on U.S. goods stood at 17.8%, less than the 32.8% the U.S. charged on Chinese goods, according to a Bloomberg Economics analysis," Xiao and Mayger reported. "Last year, China imported almost $164 billion of goods from the U.S., the lowest amount in four years."
The biggest concern for U.S. agricultural imports affected by these retaliatory measures may be soybeans, as Reuters' Mei Mei Chu reported at the beginning of March that "about half of U.S. soybeans, the country's largest agricultural export to China, were shipped to the Asian nation in 2024, totalling $12.8 billion in trade, according to U.S. data. However, China has increasingly relied on cheaper and abundant Brazilian soybeans to reduce its dependence on U.S. supplies. This has resulted in the U.S. market share in China dropping to 21% in 2024 from 40% in 2016, according to Chinese customs data."
Overall, Chu reported, "China imported $29.25 billion worth of U.S. agricultural products in 2024, a 14% decline from the previous year, extending a 20% drop in 2023. U.S. agricultural exports to China have declined since 2018 after Beijing slapped tariffs of up to 25% on soybeans, beef, pork, wheat, corn and sorghum in retaliation for duties on Chinese goods imposed by Trump."
Reuters reported that "global stocks tumbled for a second day on Friday (April 4), and banking stocks cratered as investors fretted about growth and priced in far more central bank rate cuts. Benchmark 10-year U.S. Treasury yields slid below 4%."
Reuters reported that Samy Chaar, chief economist at Lombard Odier in Geneva, said that "it's still early to make a final assessment. There are two paths from here: There is the one where (Trump) shows openness to deals and even if we have a harsh start, with reciprocal tariffs and these responses by China, they show willingness to talk and bring tariffs lower in the months to come."
"'The other path is he has no appetite to strike deals, wishes to maintain the tariffs for an extended period of time and that breaks the machine,'" Chaar said, according to Reuters' reporting. "'I don't think this (Friday's Chinese retaliation) is a signal for one or the other. Everyone will flex their muscles, but it doesn't invalidate the idea that they make a deal at some point. But beside that, we need to have signs that at some point Trump is making comments that he is expecting to strike a deal.'"
Exemption Made for Ag Imports
The following is from Ryan Hanrahan, farm policy news editor for the University of Illinois.
Agri-Pulse's Oliver Ward reported late last week that "certain agriculture inputs will be exempt from the 10% across-the-board duties and higher reciprocal duties applied to specific trade partners, according to a detailed list of carveouts published by the White House."
"Listed among the 37 pages of products excluded from the steep new duties are potash, certain herbicides and pesticides, peat, lumber products, lubricating oils, some energy products, and certain pharmaceuticals, including tranquilizers and vaccines for veterinary use. Diquat and paraquat are among the herbicides listed," Ward reported. "Representatives from the agriculture industry as well as farm-state lawmakers had been pushing the administration in recent weeks for a slate of exemptions to any new duties."
The Farm Bureau Federation's Betty Resnick wrote this past Friday that "farmers and ranchers, like all Americans, will be paying more for many of the products they purchase, from seed for vegetable growers to tractors and other equipment made of steel. Some exemptions for products including potash and peat as mentioned above, which were hard fought for by agricultural organizations such as the American Farm Bureau Federation, are a testament to the effectiveness of farmers' and ranchers raising their collective voice."
Ward reported that "ag industry representatives had been calling for exemptions to fresh produce and food products that the U.S. does not produce domestically, but none were included in the list of exempted products."
"Even if the exemptions provide some price relief on critical inputs, they will do nothing to soften the blow of any retaliatory tariffs imposed by foreign governments. China responded to the new duties with a 34% tariff on all American exports on Friday," Ward reported. "The European Union has also said it is assembling countermeasures."
Reuters' Emily Green and David Ljunggren reported late last week that "Mexico and Canada avoided fresh tariffs on Wednesday with President Donald Trump exempting the United States' top trading partners from his new 10% global tariff baseline, although previous duties remain in place."
"Goods from Mexico and Canada that comply with the USMCA trade agreement between the three countries will largely remain exempt from tariffs, except for auto exports and steel and aluminum which fall under separate tariff policies," Green and Ljunggren reported. "Trump previously imposed 25% tariffs on Mexico and Canada for not doing enough to curb migration and fentanyl trafficking, but later issued a carve out for USMCA compliant goods."
"Speaking after Trump's announcement, Canada's Prime Minister Mark Carney said he still planned to respond with countermeasures," Green and Ljunggren reported. "'We are going to fight these tariffs with countermeasures, we are going to protect our workers and we are going to build the strongest economy in the G7 (group of nations),' he said."
Reuters' Ed White reported in early March that "the U.S. imports 90% of the potash its farmers use, with 80% of those imports coming from nearby Canada, and it cannot replace that with domestic production."
"'Full pass-through of the 25% tariff could increase prices by more than $100 per ton for (potash) supplies sourced from Canada,' said a Feb. 4 analysis by a team from the University of Illinois and Ohio State University," White reported. "Farmers only make money on the difference between what they pay to grow a crop and what they can sell it for, so increasing costs by $100 per ton would be a major hit on farmer incomes."
"While Canada is not the only potash supplier to the U.S., it is the closest. Russia and Belarus are the other major players, but they have been affected by the war in Ukraine, with sanctions and port bans hurting those countries' ability to export product," White reported.
"Fertilizer is most farmers' biggest input cost. In 2024, the U.S. Department of Agriculture estimated that 22% of total corn production costs come from fertilizer, and that includes labor, machinery and overhead expenses," White reported.