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U.S. and China continue tit-for-tat trade dispute

China has increased tariffs on U.S. goods again, responding to the latest move from the United States.

“It’s certainly become a bidding war as to who can name the highest tariff.”

But Arlan Suderman with StoneX Group says it doesn’t matter how high the tariffs go – trade has essentially been shutdown between the two countries.

“That means a $430 billion consumer market has been lost by China and it also means we’ve lost export markets for some energy products as well as cotton, corn, wheat, pork and beef.”

He says China hasn’t purchased notable quantities of corn, wheat or grain sorghum from the United States in the last year, but the state buyer Sinograin continues to buy U.S. soybeans.

Suderman says that could include the recently reported sale of U.S. soybeans to unknown destinations.

“Tariffs don’t really stop a state buyer from purchasing soybeans. Those soybeans go into the reserve and if they want to at a future date, they can auction them out of reserves. We won’t see a total shutdown of soybeans going to China.”

He says the tit-for-tat isn’t affecting the U.S. grain and oilseed markets, but it is affecting beef and pork.

“We are seeing a little bit of a bounce in those markets,” he says. “Impressively, the domestic demand for beef in particular, and somewhat for pork, has held up better than anticipated, considering how far consumer sentiment and the stock market have fallen.”

Suderman says China’s purchases of U.S. beef were already at a halt because China didn’t renew registrations for U.S. beef export facilities, but pork and poultry registrations have been renewed.

As of Friday, China has a 125 percent tariff on U.S. good and the U.S. has a 145 percent tariff on Chinese goods.