I just watched another "expert" explain on TV why the new Chinese tariffs on certain agricultural products from the USA will really hurt American agriculture. That's just nonsense.
Let's use soybeans as an example. Right now, there are fields across the Northern Hemisphere which are planted with soy. It's too late in the season for new fields to be added to production. The soybean plants already in the ground will grow and produce a crop of beans. The weather could change the amount produced, but the price of soybeans won't make a difference. That means that the supply of soybeans on the world market will consist for the next nine months or so of existing stockpiles and the growth harvested later this year. Tariffs by China won't change this one bit. Supply is one half of the market equation. The other half is demand. If China puts tariffs on soybeans from the USA, it might raise prices in China if they can't get adequate supplies of soy from Brazil or Canada or some other producing country. The price rise might reduce usage a bit in China, but that's really unlikely given the centrality of soybean products in the Chinese diet.
So what will Chinese tariffs on soybean actually do? The answer is simple. Chinese tariffs on US soy products will make American soybeans more expensive than Brazilian or Australian soybeans. Chinese buyers will be more likely to purchase from non-American sources. Remember, however, that if the Chinese buy more of these products from Brazil, the Brazilians will sell less to their usual customers. Those customers, in turn, will need to find a new source of supply. The sellers with extra product will be American agriculture. So the tariffs by China on soy may result in more Brazilian sales to China and more American sales to Japan. It should not greatly damage the American agricultural sector.
Now if the tariffs stay in place until the next planting season, there may eventually be some effect, but that is a long way off and unlikely to happen.
I don't know why the so called "experts" on TV don't get this reality. It's not complicated. Most of them do seem to be about as far away from farmers as a person can get. Maybe they're just confused.
Let's use soybeans as an example. Right now, there are fields across the Northern Hemisphere which are planted with soy. It's too late in the season for new fields to be added to production. The soybean plants already in the ground will grow and produce a crop of beans. The weather could change the amount produced, but the price of soybeans won't make a difference. That means that the supply of soybeans on the world market will consist for the next nine months or so of existing stockpiles and the growth harvested later this year. Tariffs by China won't change this one bit. Supply is one half of the market equation. The other half is demand. If China puts tariffs on soybeans from the USA, it might raise prices in China if they can't get adequate supplies of soy from Brazil or Canada or some other producing country. The price rise might reduce usage a bit in China, but that's really unlikely given the centrality of soybean products in the Chinese diet.
So what will Chinese tariffs on soybean actually do? The answer is simple. Chinese tariffs on US soy products will make American soybeans more expensive than Brazilian or Australian soybeans. Chinese buyers will be more likely to purchase from non-American sources. Remember, however, that if the Chinese buy more of these products from Brazil, the Brazilians will sell less to their usual customers. Those customers, in turn, will need to find a new source of supply. The sellers with extra product will be American agriculture. So the tariffs by China on soy may result in more Brazilian sales to China and more American sales to Japan. It should not greatly damage the American agricultural sector.
Now if the tariffs stay in place until the next planting season, there may eventually be some effect, but that is a long way off and unlikely to happen.
I don't know why the so called "experts" on TV don't get this reality. It's not complicated. Most of them do seem to be about as far away from farmers as a person can get. Maybe they're just confused.
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