Soybean farmers nervous as US Commerce Dept urges metal tariffs

Soybean farmers have urged the US Administration to tread cautiously when considering whether to impose tariffs on steel and aluminium imports as they fear retaliatory action that could further “hobble” their industry.

The US Department of Commerce on Friday recommended that President Trump slap tariffs on imports of steel and aluminium to protect national security.

The recommendations, which were widely expected, outline three options, including: a tax on all imports; a tariff on individual countries that includes China; or a quota that caps imports from each country at 63% of their 2017 imports of steel and 87% for aluminium.

Wang Hejun, director China's department of commerce trade remedy and investigation bureau, was quoted by the South China Morning Post as saying: "If the final decision from the US hurts China’s interests, we will definitely take necessary measures to protect our rights.”

That has irked the American Soybean Association (ASA), which warned the President that if he accepts the recommendations, he risks triggering a trade war that could see taxes slapped on Chinese imports of US soybean, which were worth $14 billion last year.

Saying soybean farmers are concerned about potential retaliation, the ASA said that any tariffs would see Brazil and Argentinian suppliers increase market share and make it “very hard for (US) soybean farmers.”

“Soybean farmers look to the White House to move forward with a China strategy that strengthens the competitiveness of our domestic industries while at the same time growing our export opportunities.”

The news comes as Brazil's production of soybean is expected to reach over 112 million mt for the second successive year, further eroding US market share in the international market.

President Trump has until late April to respond to the recommendations, but policy analysts and economists have warned that the tariffs on steel appear punitive, even though they may have a limited impact on China’s current account.

“US imports of Chinese steel are actually quite small now so there will be a very limited impact on China’s current account,” Caroline Bain, chief commodities economist at London-based Capital Economics, told Agricensus.

“But all the rhetoric in the report blames China for creating excess supply in the market. So, I think we could certainly see retaliatory action … but nothing major I suppose until the President announces his final decision.”

The news could also put a dent in a bull-run for soybeans on the Chicago Board of Trade, which rose 4% last week on fears of a smaller-than-expected Argentinian crop.

Analysts previously told Agricensus that they expected futures to immediately dip below $9/bu on any news of a tax on US soybeans. At the time, beans were traded around $9.70/bu.

Last week they finished at $10.21/bu.

Earlier this month, China launched an anti-dumping investigation into US sorghum imports, just days after the US imposed import duties on Chinese solar panels and washing machines.