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U.S. Farmers Cry Foul as Their Biggest Export Market Slips Away

American soybeans, the humble legumes that have become prominent pawns in the U.S.-China trade war, are drying up in more ways than one.

China, the world’s biggest soy importer, just announced purchases in July jumped to the highest in almost a year. But it’s Brazil that’s satisfying the demand and its stockpiles are dwindling. Losing market share are U.S. farmers who are amplifying their discontent to the Trump administration.

Adding to the stress in the Midwest is a stretch of dry summer weather that’s making this year’s crop look worse than it has the past several years at this point. Weak demand and a lackluster harvest spell trouble for a politically important barometer — farm incomes.

Those grim prospects reflect the collateral damage trade wars inflict and the redirection of supply and demand that tariffs cause. China’s total exports in July unexpectedly rose 3.3% from a year earlier and imports shrank a less-than-expected 5.6%. While shipments to the U.S. dropped almost 7%, Taiwan, South Africa and Brazil were among the buyers of Chinese goods at double-digit increases from a year earlier.

The net result last month was a Chinese trade surplus — $45.1 billion — that doesn’t look much different than the one it posted two years ago, before the effects of higher U.S. tariffs and Chinese retaliation.

Meanwhile, Beijing’s boycott of U.S. agriculture products may not end any time soon. President Donald Trump’s threat of 10% tariffs on the $300 billion of Chinese imports atop 25% levies already on $250 billion of products will arrive at a difficult time for many. The deadline is Sept. 1, the day before the Labor Day holiday in the U.S. and just a few weeks before farmers from Iowa to Ohio start tuning up their harvesters.

Charting the Trade War

As the trade war sends investors fleeing to safety, those hunting for yields above inflation have less than half of the bond market to choose from.

Today’s Must Reads

Tariff scramble | As the U.S. rushes to finish a list of Chinese imports to hit with tariffs, companies are racing to be spared from the next round of duties. Tensions eased | Japan granted South Korea the first export license under a stricter monitoring system, lessening fears of disruptions at the world’s largest technology firms. Kashmir clash | Pakistan’s decision to suspend trade with India will cause minimal economic grief to either rival because so few goods and services flow between them. American luxury | Wealthy Chinese car buyers are embracing iconic U.S. symbols of style and power, with Cadillac crossovers and Lincoln SUVs flying off dealer lots. A long haul | Australia’s top bureaucrat predicted the U.S.-China trade tensions squeezing the global economy will likely play out for “decades and decades.”

Economic Analysis

Consumer pain | Retailers from electronics to furniture, face higher costs and margin cuts as tariff risks rise. Upside surprise | China’s export reorientation softens the trade blows but the outlook remains negative.
Source: Bloomberg

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