China responded to President Trump’s tariffs on Friday (11), raising its own tariffs on American products to 125%.
The announcement was made after Trump administration officials clarified that China now faces a minimum tariff of 145% on all exports to the United States. China mocked Trump’s tariff policies as “a joke” in an official statement and said its new tariffs, which increase the tax on American imports from 84%, would take effect on Saturday.
Stock markets shuddered in response to the latest salvo in the trade war. The S&P 500 oscillated between gains and losses at the open, while the Stoxx Europe 600 index fell.
Despite market volatility, President Trump stated that his administration was “doing very well in our TARIFF POLICY”. The president did not cite any specific examples of ongoing negotiations with foreign leaders or trade deals close to completion.
American consumers, fearful of faster inflation this year, are losing confidence in the economy, according to the latest University of Michigan survey. The survey showed that consumer sentiment plunged again in April. Respondents expect inflation to rise to 6.7%, the highest level since 1981 and a sharp acceleration from the 5% level recorded in March.
China Accelerates Purchases of Brazilian Soybeans
China is accelerating purchases of soybeans from Brazil as a way to avoid US production. This week, the country bought an “unusually large amount of Brazilian soybeans”, according to Bloomberg.
At least 2.4 million tons of soybeans were purchased earlier this week — nearly a third of the average volume China usually buys in an entire month, according to Bloomberg.
Soybeans are the main base of feed for pigs and poultry in China.
Brazil is the largest soybean exporter to China, and the United States is second. Half of US revenue from soybean exports comes from shipments to China.
There is a perception that Brazilian soybeans could gain more market share in China, however there is an important natural limitation: while Brazilian soybeans supply global markets in the first half, American soybeans are harvested and sold in the second half.
This move is a small example of how much China will seek alternatives to reduce its dependence on the US.
Sources: The New York Times, Uol and Bloomberg