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Chinese tariffs on a slew of American farm products have officially come into effect, the latest retaliation in the unfolding trade war between the world’s top two economies.
China’s willingness to use food as a countermeasure against the US, historically one of its biggest providers, underscores both the government’s success in boosting agricultural self-sufficiency and the impact of a slowing economy on demand.
The agricultural tariffs, which run from 10% to 15% on an expansive list of items including grains, proteins, cotton, and fresh produce, follow initial action focused on energy and critical metals. Soybean imports from three US firms, as well as all American timber purchases, have also been halted.
In a separate move on Saturday, Beijing imposed retaliatory tariffs on a range of Canadian agricultural goods that will come into effect on March 20.
Ensuring that 1.4 billion citizens are adequately fed continues to top the policy agenda. While China remains a key export market for largely Republican states in the Midwest farm belt, Beijing’s efforts to reconfigure supply chains after the trade war during the first Trump presidency have weakened Washington’s leverage.
The Chinese economy’s disappointing recovery from the pandemic has yielded one bright spot: a surfeit of food. Dealing with the impact of domestic oversupply has taken on more urgency. Local wheat prices are around five-year lows and corn imports have collapsed. The latest data on Sunday showed deflation taking hold of consumer prices, driven by a steep decline in food.
The government has responded by trying to protect its farmers. Traders have been asked to limit overseas purchases of grains including barley and sorghum, while shipments of soybeans have been delayed.
Beijing’s enthusiasm for trade probes and levies in recent months, targeting items from rapeseed and pulses to seafood, meat and dairy, suggest policymakers aren’t overly perturbed by creating barriers to imports, particularly on premium items that have borne the brunt of penny-pinching by households.
Backstopping all these efforts is record grain output, and a determination to use this period of plenty to build reserves. At its annual legislative meeting that concludes this week, the government raised both its production target for the year and its budget for stockpiling.