Steel and Aluminum Tariffs Impact On Agriculture

Today is the final day of the North American Farm and Power Show in Owatonna. It was fun to talk with a lot of the exhibitors and farmers at the show. When a couple farmers get together there is always things to talk about, like the weather and commodity prices. There was another topic that always seemed to come up, President Trump's tariffs on steel and aluminum imports. China is by far the largest export market for our soybeans. Chine buys about a third of our entire bean crop. Will there be any trade retaliations from China?

Some analysts think prices would drop sharply if China would impose import taxes on beans from the United States. I am sure there would be a "knee jerk" reaction from traders and bean prices would drop a lot. But, from a long term perspective the world supply of beans or the demand for those beans did not change. Even if China could access all the beans they need from South America, they would have lees beans to export to their other customers. Wouldn't they them come to buy beans from the United States?

Gordy described a good analogy on the air last week, "it is like when you squeeze a balloon, you push it in one place and it expands in another, there is still the same amount of air in the balloon." I am sure that the market bears would take control at least for a while so we all hope there will not be a trade war. It's not like the people in China are all going to eat less. If you are the leader of China with over a billion people, do you want them rioting and calling for your head because they are hungry?