Argentina and Brazil may fill China’s soybean needs if China imposes a 25 percent tariff on U.S. soybean exports.
Chad Hart, an agriculture economist at Iowa State University, said the impact depends on what happens during negotiations.
“It is so hard to say, ‘This is what is going to happen.’ There are so many other moving parts,” he said. “This is a disagreement between the U.S. and China, but it has ramifications for Argentina and Brazil.”
Earlier this month, the United States and China both announced taxes on billions of dollars worth of imported goods — China is seeking tariffs on $50 billion worth of U.S. products that include soybeans and pork, while the U.S. announced taxes on $150 billion worth of 1,300 Chinese products, including electronics.
Typically, Hart said, there’s enough outside trade and production that you can easily replace one market with another.
But with soybeans, “China is the world’s largest consumer, and the U.S. is the largest producer, … so they’ll need to replace the U.S. with some other country,” he said.
Purdue University estimates that U.S. soybean exports to China could drop up to 71 percent if tariffs are put in place, according to a study released March 28. This means the country would still need about 29 percent of U.S. soybeans.
China is a top customer for both Argentina and Brazil.
Argentina exported $3.2 billion worth of soybeans in 2016, according to data from the World Bank. Brazil exported $19 billion worth of soybeans.
China bought 51 million tonnes of soybeans from Brazil in 2017 and 31 million tonnes of soybeans from the U.S., according to the South Morning China Post.
In the short term, China could turn to Brazil's soybean crop to fill the gap, experts said.
Estimates released Monday put Brazil's soybean crop at about 115 million tonnes, according to Reuters.
And earlier this week, Argentina bought 120,000 tonnes of U.S. soybeans for delivery later this year, its largest purchase in 20 years, according to Reuters.
China is expected to import 100 million tonnes of soybeans during the 2017-2018 marketing year, according to a Reuters analyst.
“There’s a lot of moving parts to this,” said Todd Hubbs, an agriculture economist at the University of Illinois. “A trade spat is another variable creating a lot of uncertainty.”
If tariffs are put in place, China would remain a customer but it is hard to predict how much of a decrease in soybeans they would import, he said.
While the financial market responded right away to the potential tariffs, they are “not doing this tomorrow,” said Patrick Westoff, a University of Missouri professor and director of the Food and Agricultural Policy Research Institute.
But, he said, “when you have a country buying more than 50 percent of exports and more than 30 percent of produce, it’s kind of hard to not have an impact.”
Illinois-based Archer Daniels Midland is one of the largest grain and oilseed processing companies in the world. Soybeans accounted for 17 percent of its $60.8 billion revenue in 2017, according to its annual report.
“ADM’s global reach offers America’s farmers access to markets far beyond the United States, and as such we are supportive of free and fair trade policies that help agricultural and food products move efficiently around the globe. These tariffs are not yet final, and we are hopeful for a positive resolution,” said ADM spokeswoman Jackie Anderson in a statement.
Johnathan Hettinger contributed to this story.