US-China Trade: Sell US Soybeans – And Get Played
I have a bad feeling about the U.S. - China trade negotiations. One gets the impression President Trump is so keen for a deal that he’s walking into trouble.
One thing China is playing him on is soybeans. Trump has called for a 4x increase in Chinese purchases of US soybeans. However, the Chinese aren’t buying and instead are buying soybeans from the Brazilians, who according to reports, can meet China’s entire demand.
But I’ll bet Beijing eventually ‘concedes’ on soybeans and agrees to buy a lot of American ones.
One trade expert told me: “I am reasonably confident that -- thanks to that other export to us, Salt Typhoon (PRC government-backed hackers) -- the Chinese knew the administration would make this 'demand;' Beijing might have even 'incepted' the idea and then spun up the soybean industry to lobby for it.”
Chinese trade warfare has indeed successfully influenced U.S. soy farmers so that they are literally and psychologically totally dependent on China.
The CCP wants to convert that sense of dependence into farmers appealing and lobbying Washington, DC to keep the soy trade lines open and free of interference, because it is their “lifeline”. And they are, after all, voters who can make a difference in who sits in Washington.
A recent letter from the American Soybean Association to President Trump suggests the Chinese strategy of ‘pressure by local proxies’ is working. The letter notes:
“U.S. soybean farmers cannot survive a prolonged trade dispute with our largest customer … Mr. President, you have strongly supported farmers and farmers have strongly supported you. We need your help.”
One marvels at U.S. soybean farmers’ total ignorance of the customer. Who would be foolish enough to make China their chief customer? Apparently most U.S. business and industry if the last 40 years are anything to go by.
So suppose China agrees to buy more soybeans from the United States.
If you see the world in bilateral trade deficits and surpluses, "making" the PRC buy more soybeans looks like winning. And it is, for Archer Daniels Midland, Bunge, Cargill maybe and COSCO, which will ship the beans and maybe do a little intelligence collection in the Port of Long Beach while loading.
Trump can claim victory and in exchange he goes easy on China on something else in return - say relaxing chip and tech exports. And he ignores fentanyl too. Well over half a million Americans killed by Chinese-origin fentanyl since 2013 – and still no punishment from any U.S. administration – including the first Trump administration.
A 20% fentanyl tariff? That only hurts the Chinese from the pain of pinching themselves to keep from laughing.
But even better from China’s own ‘art of the deal’ perspective is that China takes the American soybeans and transforms them (in China or a 3rd country) into products like pharmaceuticals, cosmetics, adhesives, supplements, printer ink, and many others. It exports these back to us in a higher value-added form, and earns a ton of foreign exchange - much more than the amount it paid for the ‘raw’ beans.
And keep in mind that soybeans are commodities. Why do we think those U.S. soybeans will stay in China? Maybe they will become food aid to some country in which the CCP wants to grow influence, maybe they will be bartered for something else China wants?
I don't begrudge U.S. soybean farmers more demand for their crops and others the fun of speculating on soybean prices. But the trade deficit is not our biggest problem. I 'd prefer to withhold product from China, and sell like crazy elsewhere, to reduce our dependence on them as a market.
Beijing’s current stranglehold over the Trump administration via America’s self-inflicted ‘rare earth’ dependency alone ought to be alarming enough to prompt a change in behavior.
So if China agreeing to buy US soybeans is touted as a success, maybe it’s instead evidence of a game we are losing.
Grant Newsham is a retired U.S. Marine officer and former U.S. diplomat. He’s a fellow at the Center for Security Policy and the Yorktown Institute, and is the author of When China Attacks: A Warning to America. Follow on X @NewshamGrant
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The best path forward is to greatly reduce any dependency on Chyneez goods - services. As well as, significantly reduce visas from Chyna. There is very little to gain from this relationship that benefits America // Americans, let's keep it strictly transactional and completely forget we have anything in common with the CCCP. They are a true 'enemy' and should be treated as such.
Grant, the U.S. government would have punished individuals or companies that conducted business with Japan or Germany during WWII. Nor would it have allowed the same from doing business with the USSR. So why have we allowed them and the U.S. military from collaborating with the CCP?