Despite what the title says, 5 million tons is not, it turns out, a lot of soybeans. In fact, America produces 4.3 billion bushels of soybean. In 2017, China purchased 31 million tons of Soybeans. So China, which had cut its import of Soybean to nearly zero by the end of 2018, has agreed to restore something like 7% of what it had imported in the past...this is called victory.
The latest news is that China has actually contracted for 2 million tons, so about 40% of what they had indicated they were going to purchase, and something like 3% of what they bought in 2017. So Trump got played -- the problem when you start a trade war, are the long term ramifications. The truth is that China has secured alternative sources of Soybean elsewhere. They have signed contracts so its harder to go back. Moreover, the beans are not usually purchased by government entities. It could take several years until trade levels return to their 2017 level -- and this only once relationship between China and America normalize (if they ever do).
The real issue is that America has become accustomed to being the only superpower, and it's finding it difficult to allow China to join the club. A real war is unlikely between the two -- the distances are just too great, but Taiwan and other nearby state are already seeing a much more aggressive China.
Its funny because for most people 5 million tons is considered a lot, but in the greater scheme of things its not.
The latest news is that China has actually contracted for 2 million tons, so about 40% of what they had indicated they were going to purchase, and something like 3% of what they bought in 2017. So Trump got played -- the problem when you start a trade war, are the long term ramifications. The truth is that China has secured alternative sources of Soybean elsewhere. They have signed contracts so its harder to go back. Moreover, the beans are not usually purchased by government entities. It could take several years until trade levels return to their 2017 level -- and this only once relationship between China and America normalize (if they ever do).
The real issue is that America has become accustomed to being the only superpower, and it's finding it difficult to allow China to join the club. A real war is unlikely between the two -- the distances are just too great, but Taiwan and other nearby state are already seeing a much more aggressive China.
Its funny because for most people 5 million tons is considered a lot, but in the greater scheme of things its not.
Comments