China implements food as a tall, cheap weapon in the trade war

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(Bloomberg) — Chinese tariffs on a slew of American farm products have officially come into effect, the latest retaliation in the unfolding trade war between the world’s top two economies.

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China’s willingness to use food as a countermeasure against the US, historically one of its biggest providers, underscores both the government’s success in boosting agricultural self-sufficiency and the impact of a slowing economy on demand. 

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Agricultural tariffs, which last from 10% to 15% on the expansive list of items, including grains, proteins, cotton and fresh products, follow the initial actions focusing on energy and critical metals. Soy import from three American companies, as well as all American wood purchases, was also detained.

In a separate move on Saturday, Beijing imposed a retaliation tariffs on a number of Canadian agricultural goods that will enter into force on March 20.

Ensuring adequate feeding of 1.4 billion citizens is still at the top of the politics program. While China remains a key export market for largely republican countries in the middle west of the agricultural belt, Beijing efforts aimed at reconfiguring supply chains after the trade war during the first presidency of Trump weakened the Washington lever.

Disappointing recovery of the Chinese economy after Pandemic brought one bright place: catching food. Coping with the influence of the national surplus will be on urgent needs. Local wheat prices are about five years of minima, and the import of corn has collapsed. The latest data on Sunday showed a definition of consuming consumer prices, driven by a rapid decrease in food.

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The government answered, trying to protect its farmers. Traders were asked to limit foreign cereal purchases, including barley and sorghum, while soy shipments were delayed.

Beijing enthusiasm for trade probes and fees in recent months, focused on items, from rapeseed and impulses to seafood, meat and dairy products, suggest that decision -makers are not too concerned by creating import barriers, especially in premium positions that gave birth to a hard pelny hit by households.

The cooperation of all these efforts is a record production of grain and determination to use this abundance period to build reserves. At the annual legislative meeting, which ends this week, the government raised both the production goal for the year and the budget for reserves.

More technical means are also promoted, such as a reduction in soy meal in animal rations, which indicates persistent fear of the susceptibility of breeders to foreign soy resources.

Soy is the highest agricultural export in America to China, worth almost $ 13 billion in 2024, and in recent years has focused on intensive efforts to change the dependence of the country to other, less antagonistic suppliers such as Brazil.

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The seasonality of world production will cause that the Nation of South America will be the majority of Chinese imports up to at least the fourth quarter, which probably leaves a 10% tariff for American beans, neither here or there in the coming months.

Of course, the government will want to obtain economic motoring, and a large part of this will encourage buyers to open their wallets. A successful stimulus from the authorities could see the increase in food prices, and thinking about imports change. The impact of extreme weather crops caused by climate change would also affect calculations.

But in the meantime, focused on American agricultural goods, Beijing implements one of the cheaper weapons with a higher influence in a commercial arsenal.

On the wire

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China said that this will impose a retaliatory tariff on the import of crude oil, pork and seafood from Canada as escalating trade wars. Rapeseed Futures sank according to the exchange limit.

The inflation of China consumers has fallen much more than expected that it would fall below zero for the first time in 13 months, the assessment distorted by seasonal distortions, but also a sign of deflating pressure in the economy.

The next rounds of sanctions against companies and tankers, which are said to help in Tehran, eventually slows down the flow of Iranian oil to China, because the costs and more traders are growing to make risky efforts to circumvent US funds.

Journal of this week

(Beijing all the time, unless it was marked.)

Monday, March 10:

• China puts tariffs on agricultural goods in the USA
• National People’s Congress in Beijing, day 6
• China to issue data on finance and cash supply by March 15

Tuesday, March 11:

• The National Congress ends in Beijing
• International conference of the ore ore market in Qingdao, day 1
• Monthly report on Casde Casde Casde

Wednesday, March 12:

• International market conference of iron ore in Qingdao, day 2
• NUTRY PRICE Rating Polysilicon CSIA
• Weekly CCTD online briefing on Chinese coal, 15:00

Thursday, March 13:

• International market conference of iron ore in Qingdao, day 3
• Weekly rating of CSIA solar prices
• Earnings: Rusal

Friday, March 14:

• Chinese weekly stocks of iron ore port
• Shanghai Exchange Weekly Commodities Inventory, ~ 15: 30
• Earnings: Catl, Hongqiao

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