Tuesday, November 06, 2018

The U.S. is Losing to China in Latin America

China imposed a 25% tariff on U.S. soybeans in response to President Trump's launch of a trade war.  China's strategy is to wean itself off U.S. soy. A major part of this effort is to pay closer attention to Latin America, which I mentioned two months ago in a sort of "wait and see" kind of way. Now we are seeing. Here are some results this year:

  • Chinese business has developed a strong soy export sector in Paraguay.

  • China wants to import soy from Bolivia but this year announced there was something wrong with it, so was going only with quinoa and coffee. Stay tuned, I guess.
The implications here are obvious. The trade war has deepened and accelerated China's economic relationships with South America, which had already been growing rapidly in the last decade or two. Once those kinds of ties are forged, they do not disappear quickly. If Trump insists on dragging out the trade, U.S. soy farmers will eventually have to fight for re-entrance in a market they lost.


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