The fears of U.S. farmers came true on Wednesday, after China’s Ministry of Commerce slammed the United States with retaliatory tariffs targeting a number of products, including soybeans.
Beijing’s decision to impose steep 25 percent tariffs on 106 U.S. goods, impacting $50 billion in U.S. exports, comes one day after the Trump administration announced plans to target $50 billion in Chinese imports across a range of products.
“As the Chinese saying goes, it is only polite to reciprocate. The Chinese side will resort to the WTO dispute settlement mechanism and take corresponding measures of equal scale and strength against U.S. products in accordance with Chinese law,” a Ministry of Commerce statement read. “We hope that the U.S. side, with sense and long-term picture in mind, refrain from going further down the wrong path.”
The targeted items include aircraft, automobiles, and chemical products, but the inclusion of soybeans is perhaps most disconcerting to U.S. farmers, many of whom have lobbied the Trump administration in an effort to convince the president to step back from further aggressive trade moves.
A bitter stalemate in North American Free Trade Agreement (NAFTA) renegotiations has already hit farmers hard, as Mexico has shifted its efforts towards Brazil and other areas. Those same farmers are worried aggressive U.S. tariffs targeting countries like China might worsen the problem: soybeans are the leading U.S. agricultural import to China, meaning any action targeting the product could be devastating.
President Trump has previously argued that “trade wars are good” and has appeared open to escalating U.S. trade tensions with various countries, particularly China, against expert advice. The swiftness of the Chinese response on Wednesday — which took only 11 hours — has raised fears of a trade war.
“If someone wants a trade war, we will fight to the end,” Wang Shouwen, the country’s vice-minister of commerce, noted bluntly.
China’s announcement on Wednesday came as a surprise to a number of experts. The country relies heavily on soybean imports and the tariffs stand to hurt China alongside the United States. But the decision indicates China is willing to match U.S. threats, despite the risk.
The move also has sweeping implications in areas like the U.S. South and Midwest, where Trump has promised revitalization and the restoration of jobs. Last month, U.S. threats prompted a fiery response from the European Union, which announced its own plans to impose retaliatory tariffs. A list circulated by the EU targeted U.S. products like Kentucky bourbon and North Carolina tobacco, leading to strong condemnations of Trump’s efforts from members of his own party.
Tariffs targeting the EU are now on hold, but the White House hasn’t eased up on China, despite Trump’s insistence that the United States is not seeking a full-blown trade war.
“We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.,” Trump tweeted on Wednesday morning.
Experts believe that China may soon follow Mexico’s example and turn to Brazil in an effort to offset the loss of U.S. soybeans. “This will obviously benefit Brazilian exporters. They will be licking their lips right now,” Warren Patterson, a commodity strategist, told Bloomberg.
China’s list also includes products such as cotton, whiskey, and frozen beef, among others. Reflecting global concerns of a coming trade war, Wall Street took a steep dive Wednesday morning, with the Dow plummeting 500 points.
President Trump appeared unconcerned, tweeting, “When you’re already $500 Billion DOWN, you can’t lose!”