WASHINGTON — Perhaps no group of U.S. farmers has more to lose from a trade war with China than soybean growers.
This planting season, the farmers have been watching the headlines as carefully as the weather, hoping that China won’t act on its threat to impose a 25 percent tariff on U.S. imports and thus restrict access to the largest soybean market in the world.
President Donald Trump, who once tweeted “trade wars are good, and easy to win,” has shown that he’s willing to step to the brink of one. So has Chinese President Xi Jinping, whose government has countered American tariff threats with threats of its own.
Midwestern farmers breathed a sigh of relief this week, when Chinese trade negotiators in Washington agreed to suspend tariffs and increase purchases of U.S. agricultural products. But the negotiations have yet to produce concrete commitments, and the trade fight is likely to continue.
“I’m excited, but cautiously excited,” said John Heisdorffer, a farmer in southeast Iowa and president of the American Soybean Association.
With farm incomes projected to drop this year to the lowest level since 2002, farmers say they’re especially vulnerable to market tremors. “Everyone’s at break-even or in the red, and any little thing like this can make you apprehensive,” Heisdorffer said of the trade spat.
Soybean farmers haven’t been hit hard by the trade tensions yet. Soybean prices fell when China threatened a tariff but later stabilized. Midwestern farmers don’t typically sell many beans in the spring, anyway.
But a soybean tariff could have a big impact, more so than a 25 percent tariff on pork that China imposed in April and farmers say is already affecting prices. “There are animals that we’ve marketed that we’ve lost money on,” said Bill Shipley, the president of the board of the Iowa Soybean Association and a farmer who grows soy and raises pigs.
While U.S. Treasury Secretary Steven Mnuchin said Monday that both the United States and China have agreed to suspend tariffs, it wasn’t clear what tariffs would be suspended and when. And the long-term impact on farmers remains to be seen.
This year American farmers are expected to plant more acres of soybeans than corn for the first time in decades. Almost two-thirds of beans harvested in recent years have been shipped to China, where soybeans are used in animal feed and cooking oil.
Analysts expected soybeans to be one of the biggest victims of the escalating trade fight.
Purdue University estimated that a Chinese tariff on U.S. soybeans could mean economic losses of between $1.7 billion and $3.3 billion a year.
“The fundamental issues, or points of dispute, have not been solved,” said Mike Steenhoek, executive director of the Soy Transportation Coalition, which advocates on transportation issues affecting the soybean industry. Among those are the U.S. government’s position that China is engaging in intellectual property theft. Steenhoek said his group worries the political drama could give trading partners an excuse to buy from other countries.
Farmers are also reassessing the strength of U.S. trade relationships. In March, about half of 400 agricultural producers surveyed by Purdue University said the agricultural sector was likely to get caught up in a trade war.
“I think if you’d asked that question a few years ago, it would have been near zero,” said David Widmar, an agricultural economist who leads the survey.