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China has rare earth metals. The United States and Brazil have soybeans.
For all the chokeholds China maintains on global supply chains, it is overwhelmingly dependent on soybeans from other parts of the world. China imports three-fifths of all the soybeans traded on international markets. Now with China and the United States locked in a tense standoff over tariffs, soybeans have emerged as a central dispute between the trading partners.
China has been boycotting purchases of U.S. soybeans since late May to show displeasure with President Trump’s imposition of tariffs on imports from China. The pain is being felt in Midwest states, especially Illinois, Iowa, Minnesota and Indiana. For the first time in many years, American farmers are preparing to harvest their crop this fall with no purchase orders from China.
“The further into the autumn we get without reaching an agreement with China on soybeans, the worse the impacts will be on U.S. soybean farmers,” the American Soybean Association warned in a letter to Mr. Trump on Aug. 19.
But China also faces risks in the standoff. Brazil, which will harvest its crop early next year, is the only other country with enough soybeans to meet Chinese demand and enough trains and port capacity to move those soybeans to China.
“I think they could probably go without American soybeans this autumn, but if Brazil has some drought or flood that affects their crops next year, it would put China in a difficult position,” said Darin Friedrichs, the managing director of Sitonia Consulting, a research firm specializing in Chinese agriculture.
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