Donald Trump's trade war with China already hurting American farmers

US soybean exports, harvested in the Republican-leaning Mid West, have already effectively been halted according to agribusiness giant Bunge

Donald Trump’s trade war is already hitting one of his core domestic constituencies.

After the US president announced plans in March for $60bn (£44bn) of tariffs on Chinese imports, Beijing issued a counter-threat of swingeing levies on imports of US agricultural products.

Those Chinese tariffs have not yet been formally implemented, but the US agribusiness Bunge said on Wednesday that US shipments of soybeans had already been effectively halted anyway.

“Nobody’s willing to take the risk of committing to US soybeans to China in the current context, knowing that there could be a $100 penalty from one day to the other, and no way of managing that risk,” said Bunge’s CEO, Soren Schroder said in an interview .

The current price of a ton of soybeans exports to China is $420. China’s threat of a retaliatory tariff of 25 per cent on US produce would translate into roughly a $100 penalty.

The claim that the trade is drying up is backed by official US trade figures, which show soybean sales to China over the last month down 10 per cent from on a year earlier.

In the two weeks to 19 April, China cancelled a net 62,690 metric tons of US soybean purchases according to Bloomberg.

Mr Schroder added that other soybean exporters, such as Brazil and Canada, have been ramping up their China sales as the US supply contracts.

“They’re buying beans in Canada, in Brazil, mostly Brazil, but very deliberately not buying anything from the US,” he said.

Soybeans are America’s most valuable export crop. And half of US soybean production is exported, with 60 per cent of that going to China.

The trade was worth around $12bn in 2017.

Production is also heavily concentrated in the Mid West of America, a political heartland for the Republicans and a stronghold for Trump.

In Missouri, Trump beat Hillary Clinton in the 2016 election by a margin of 56 per cent to 38 per cent. In some farming counties the margin was much higher.

China imports around 90 per cent of its annual 110 million ton soybean consumption, making it the world’s biggest customer for the crop.

Mr Schroder said that uncertainty over trade prospects was also disrupting US farmers’ investment plans.

“The trade stuff has been another layer of uncertainty that nobody really knows how to price yet,” he said.

A new analysis by two researchers from the University of Tennessee estimates that a 25 per cent Chinese tariff could cause US exports to fall to $7.7bn.

“There could be profound implications for US soybean exports and farm-level losses for US soybean producers,” wrote Andrew Muhammad and Aaron Smith.