News trade war
China to demolish tariff wall for US soy and pigs
China will (partially) remove import tariffs on American pork and soybeans. This decision was taken at the request of the business community, the Chinese trade minister said on Friday, December 6.
Further details have not yet been disclosed, but they are reportedly significant volumes. China has traditionally imported large volumes of pork and soybeans from the United States, but these have been trade war (which flared up in the summer of 2018) taxed at 25%.
Partly self-interest
The Chinese decision is partly in its own interest. The African swine fever outbreaks have reduced the pig population in the country by about 50%. That amounts to almost 200 million pigs. According to Rabobank estimates, the deficit will rise to 20 million tons. China is therefore very dependent on foreign supplies. The United States is the second largest exporter of pork in the world after the European Union and is therefore able to make up the Chinese deficit.
In the United States, the news is undoubtedly received with a smile. In recent months, farmers' advocates in the country have lobbied a lot for the tariffs to be lifted. For meat exporters in the European Union, the decision will most likely be less positive, given that the competitive advantage is (partially) lost.
Will soy prices rise?
Several analysts have warned of a rapid price increase for soybeans in the run-up to a possible deal. It is therefore quite possible that the listing on the CBOT in Chicago in the next few days will choose the upward direction.
Wouter Job
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