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China imposes 5%-10% additional import tax on four US soybean varieties

London — China will impose an additional 5%-10% import tax on four US-origin soybean varieties from September 1, the Ministry of Finance announced Friday.

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This retaliatory tax, ranging between 5%-10%, covers a total of 5,078 trade items of US-origin worth $75 billion, including the four soybean varieties, the announcement said.

According to the Chinese ministry, effective September 1, total import duty on US-origin yellow soybean will be 30%, while 35% import tax will be levied on other soy varieties in total, such as green soybean, soybean seed and other soybean.

China is the world's biggest soybean buyer, accounting for over 60% of global soy purchases, with average annual buys of 86 million-90 million mt.

The Chinese Finance Ministry said that US tariffs on Chinese goods had led to the continuous escalation of Sino-USeconomic and trade frictions, which had done great harm to the interests of China, the US and other countries, and alsoseriously threatened the multilateral trading system and the principle of free trade.

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US-China trade tension which started last July, when China imposed a retaliatory 25% import tariff on US-origin soybeans in response to tariffs the US had placed on Chinese goods. As a result, soybean shipments from the US to China fell 81% year on year to 5.4 million mt during July 2018-March 2019, according to the US Census Bureau, as Chinese buyers looked to South America for soybeans.

Despite a series of trade talks since last December to resolve the tension, Beijing and Washington couldn't reach an agreement. Both sides continue to blame each-other for failure to resolve the differences.

In July, President Donald Trump accused China of not buying US agricultural products as promised. In a series of tweets, he added that China always changed any deal in the end to its benefit. The US-China trade talks restarted after Trump met his Chinese counterpart, Xi Jinping, on the sidelines of the G20 summit in Osaka, Japan, last month. After themeeting, China agreed to buy more US-origin agricultural products, including soybeans.

However, on July 11, the US president complained that China was not buying US farm products. "They have not been buying the agricultural products from our great farmers that they said they would," Trump tweeted then.

Accusing China of not buying enough, on August 15, the Trump administration announced it would impose an additional 10% tariff on approximately $300 billion of goods imported from China, which will be implemented in two batches from September 1 and December 15.

Since this August, the US government has deployed $16 billion in assistance to farmers affected by trade disputes and unfavorable spring weather, according to the US Department of Agriculture. The bailout payments include $14.5 billion in direct payments to producers of crops and meats, including soybeans, pork, and almonds, USDA said.

Last year, the Trump administration authorized a similar farm assistance of $12 billion to farmers, including soybean growers, affected by trade disputes.

The farm aid might be a temporary solution, as US soybean farmers and traders are hoping for a quick resolution ofthe trade dispute with China, sources said.

This latest escalation of US-China trade tension means tough times ahead for US soybean farmers, who sit on huge unsold inventory and plummeting prices.

The ending stocks for US soybean in the current marketing year, ending August 31, is estimated at 29.13 million mt, up 144% year on year, the USDA said in its latest report.

US-origin soybean has been selling at a huge discount in comparison to its biggest competitor, Brazil, world's biggest soy exporter.

-- Asim Anand, aanand@spglobal.com

-- Edited by Jonathan Dart, jonathan.dart@spglobal.com