Much of the attention has been focused on a 25% tariff on U.S. soybeans bound for China, as they account for about 60% of the U.S.’s $20 billion of agricultural products to the Asian country. It is estimated that with the new tariff, U.S. soybean shipments to China will drop off by at least $4.5 billion, according to a recent University of Tennessee study.
But other U.S. agricultural commodities such as wheat already were seeing a slowdown in Chinese demand before the July 6 deadline.
The U.S. Wheat Associates (USW) noted that from March to June over the previous three years, Chinese flour milling companies and other importers purchased an average of about 20 million bushels of U.S. wheat for more than $145 million.
That has changed dramatically in 2018, according to USW.
“Unable to accept the risk of escalating import prices, Chinese customers stopped making new purchases of U.S. wheat last March, after the Chinese government threatened a 25% import tariff on U.S. wheat in retaliation to the threat of U.S. tariffs on Chinese imports,” the USW said.
USW said the exchange of punitive tariffs between the two countries represents “the next phase of what could be a long and difficult struggle that will likely inflict more pain before we reach an unknown resolution.”
“U.S. Wheat Associates, the National Association of Wheat Growers (NAWG) and the growers we represent reaffirm our position that unfair Chinese government policies create unnecessary trade distortions that hurt U.S. farmers and other industries,” USW said. “We urged the U.S. government to challenge China’s domestic price support and tariff rate quota compliance that led to cases disputing these policies within the World Trade Organization (WTO). These cases served notice to China and our trading partners that the United States was willing to lead a legitimate effort to enforce existing trade rules — by following those rules.
“China did not stop importing U.S. wheat in response to these cases, in part because Chinese demand for our high-quality wheat crops is rapidly growing. The unilateral decision to impose tariffs, however, has already had a direct, damaging effect on U.S. wheat growers.”
China imported more than 61 million bushels of U.S. wheat in marketing year 2016-17, making it the fourth largest buyer of U.S. wheat in the world, according to USW.