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China's strongest weapon in a trade war with Donald Trump may backfire
(Bloomberg) -- As tensions escalate between the U.S. and China, one crop is emerging as the most powerful weapon in a potential trade war: the soybean.
China is the biggest buyer of American soybeans, picking up about a third of the entire U.S. crop, which it uses largely to feed 400 million or so pigs. President Xi Jinping’s administration is studying the impact of restricting soybean imports in retaliation for U.S. tariffs on washing machines and solar panels, people familiar with the situation told Bloomberg last week.
Any China soybean curbs would directly hit farmers in Midwestern U.S. states that President Donald Trump needs to win re-election in 2020. Yet they would also pose a big risk for Xi: His nation is the world’s largest pork producer and consumer, and higher costs for pig farmers could increase prices of meat for his nation’s 1.3 billion citizens.
Food prices have long been a politically sensitive issue for China’s ruling Communist Party, which rose to power in 1949 in the wake of economic mismanagement that led to hyperinflation. A surge in the cost of everything from pork to electronics in the late 1980s also stoked dissatisfaction in the run-up to the Tiananmen Square protests.
(Bloomberg) -- As tensions escalate between the U.S. and China, one crop is emerging as the most powerful weapon in a potential trade war: the soybean.
China is the biggest buyer of American soybeans, picking up about a third of the entire U.S. crop, which it uses largely to feed 400 million or so pigs. President Xi Jinping’s administration is studying the impact of restricting soybean imports in retaliation for U.S. tariffs on washing machines and solar panels, people familiar with the situation told Bloomberg last week.
Any China soybean curbs would directly hit farmers in Midwestern U.S. states that President Donald Trump needs to win re-election in 2020. Yet they would also pose a big risk for Xi: His nation is the world’s largest pork producer and consumer, and higher costs for pig farmers could increase prices of meat for his nation’s 1.3 billion citizens.
Food prices have long been a politically sensitive issue for China’s ruling Communist Party, which rose to power in 1949 in the wake of economic mismanagement that led to hyperinflation. A surge in the cost of everything from pork to electronics in the late 1980s also stoked dissatisfaction in the run-up to the Tiananmen Square protests.
