Rising U.S.-Chinese tensions raise concerns about trade

The trade relationship between China and the United States is deteriorating and poses a threat for U.S. farmers, say analysts.

“They are shifting away from the United States rather than sending their money here,” StoneX chief economist Arlan Suderman said during a live taping of the U.S. Farm Report at the 2024 Commodity Classic.

The U.S. and the European Union are also “deleveraging” their economies from China, so it goes both ways.

China is still buying plenty of U.S. corn and soybeans, but it prefers South American crops, and there are mounting risks that a full-blown trade war could once again erupt between China and the U.S.

“One of the scary things is (Chinese president) Xi Jinping is starting to isolate himself,” said Suderman.

He recently removed people from his inner circle who would disagree with or challenge him and instead surrounded himself with loyalists.

“Now people are afraid to tell him what he needs to know, and when a leader does that, they start to isolate themselves, they start to get a little paranoid,” said Suderman.

He has also stopped attending some meetings with western leaders, such as last year’s G20 summit in India.

Suderman wonders if an invasion of Taiwan is imminent because China appears to be stockpiling agricultural commodities such as soybeans and corn.

It is odd that they would be buying so much corn after harvesting a bumper crop that StoneX believes is even bigger than the official Chinese government estimate.

He noted that Xi has publicly stated he will bring Taiwan back into the fold before he leaves office.

“He’s over 70 now. How long does he wait?” said Suderman.

U.S. Farm Report host Tyne Morgan asked Suderman how hard it is for StoneX’s people on the ground in China to relay information back to their colleagues in the U.S.

“We’ve had contacts before just kind of disappear,” he said.

Suderman has an employee in Shanghai who has been told by her close contacts that she needs to be careful what she says.

She provides Suderman with a communique each morning that he shares internally within the company.

“I say, ‘are you sure you should be writing that?’ because she’s very open and transparent,” he said.

Her response was that she will be fine as long as the information stays within the company.

Suderman, who is sometimes quoted by Chinese state media, said he never divulges where his information about China comes from during media interviews.

Chip Flory, editor emeritus with ProFarmer and host of AgriTalk, said tensions between the U.S. and China could be on the rise if former U.S. president Donald Trump is re-elected this fall.

News reports say Trump is contemplating slapping tariffs as high as 60 percent on Chinese goods if elected.

Flory wonders how China would retaliate if that happened. Would it result in another full-blown trade war with U.S. farmers collecting another round of trade-distorting Market Facilitation Program payments?

He also scratches his head about how the U.S. ended up at a point where the only choice is between Joe Biden and Donald Trump.

“Where are the leaders?” he asked.

Morgan offered up an answer to that query.

“Who wants to sign up for this chaos in Washington?” she said.

Morgan has asked numerous political analysts and agricultural economists if they have ever seen it this bad in Washington.

“And they say, ‘no, it is absolute chaos.’ “

She has spoken to staffers working on the 2024 farm bill who are extremely frustrated because they are “working their tails off” and nothing gets accomplished.

Flory said nobody from either party wants to reach across the aisle and get something done because they risk being blackballed by their party.

Tags: trade, soybeans, China, corn, United States