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China’s Pull Out From The U.S. Agriculture Amid Tariffs Is A Harsh Blow

Reportedly, agriculture is used as a weapon of choice in the ongoing growing trade spat amid the two largest economies globally. With China’s official withdraw from purchasing US agricultural products the American farmers have lost one of their largest customers. This can be a destructive step in an already roller-coaster year for commodity and crops prices. This exit can also affect US’ GDP (gross domestic product) and adversely affect companies such as John Deere, whose main operations and business are directly connected to farming. According to Patrick Westhoff—Director of the FAPRI (Food and Agricultural Policy Research Institute) at the UM (University of Missouri)—owing to the existing tariffs the sales have been decreased in this crop year. He added, “If throughout we went for no China exports or whatsoever, that will outcome in even larger price and market impacts. Completely excluding China out of the market is not going to help us as it is a big deal.”

According to the U.S. Census, in the last year, China generated $5.9 Billion from the U.S. farm product exports. China is the major purchaser of soybeans worldwide and purchased 60% of the U.S. soybean exports in 2018. He estimated that soybean prices declined by 9% ever since the trade war started in the last July. From September 2017–May 2018, the U.S. exported 27.7 million tons of soybeans to China. That number decreased by over 70%, to 7 million tons during the same period in 2018 and 2019 as per to an analysis by the UM. The levies have shown rippled impact across other crops. Farmers were inclined to cultivate more crops such as corn, owing to the less demand for soybeans. That resulted in lower corn prices as there was surplus production of corn.

Speaking of the trade battle, recently, Bridgewater’s Ray Dalio supported China in spite of the trade war escalation. Ray Dalio—Founder of Bridgewater Associates, which is the largest hedge fund globally—requested financiers to gamble on “both contenders in the race” in the middle of surging trade tensions amid China and the U.S. Dalio stated that financiers still has a historic opportunity to invest in China as it opens its gates for overseas investments.

Fred Traylor
Fred Traylor Subscriber
Lead Editor At Industry News Archive

Fred holds a Master’s degree in Business in Finance but his interest in reading and writing helped him take writing as a career option. Fred is a very vocal and brainy individual who has his thoughts and skills presented to the public in a very serene and chisel manner. The business-related data such as acquisitions, losses, profits, market status, national revenue, and many more are all penciled down only after a thorough analysis. His linguistic nature has helped him write down all the articles by playing with a collection of words from the thesaurus. Industry News Archive waits to have its future be molded by such budding writers.

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