Category Archives: commodities

A History of Trade Policy Retaliation: Soybeans Edition

As the date of the resolution of the US-China trade dispute drifts further and further — perhaps past the 2020 elections according to Mr. Trump — it behooves us to look at what soybean futures contracts for September 2019 indicated as of Trump’s announcement of Section 301 action against China ($10.30 bushel on 3/22/2018) vs $8.67 today (Sept. 2019 is the front month future for soybeans now).

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The Never-Ending Blip

On July 9, 2018, almost exactly a year ago, reader CoRev wrote:

Those of us arguing against the constant anti-tariff, anti-Trump dialogs have noted this will probably be a price blip lasting until US/Chinese negotiations end. We are on record saying the prices will be back approaching last year’s harvest season prices.

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The 16 Month-long Blip in Soybean Prices

On July 9, 2018, reader CoRev disparaged futures prices as accurate predictors of future spot prices for soybeans, writing:

no one has denied the impact of tariffs on FUTURES prices. Those of us arguing against the constant anti-tariff, anti-Trump dialogs have noted this will probably be a price blip lasting until US/Chinese negotiations end. We are on record saying the prices will be back approaching last year’s harvest season prices.

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“Across-the-Board Tariffs on China with Retaliation and Federal Spending Create Over 1 Million Jobs in Five Years”

The Coalition for a Prosperous America publishes another study imbued with “secret sauce” structure…From the “working paper” (more akin to a press release):

Specifically, we introduce the effects of Chinese retaliation with tariffs on US exports to China; we add the effects of the US Department of Agriculture’s (USDA) programs to support farmers and food processors negatively affected by Chinese retaliation; and, we add the impact of the US government spending the revenue generated by the China  tariffs. We find that Chinese retaliation reduces the benefit to the US economy by 14 percent, but the net benefit remains large. The USDA programs provide relief to the agricultural industry and restore the net benefit to almost the same level as before the retaliation. Finally, we look at the impact of the government reinvesting the tariff revenue in the US economy by boosting government spending…

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