China’s Ministry of Finance announced on Friday that it would raise its additional tariff on U.S. imports to 125% to match the U.S. reciprocal tariff rate.
In a statement, the Finance Ministry acknowledged that 125% would shut many U.S. products out of the Chinese market, a point multiple representatives from the soybean industry have been making in recent days. It also suggested that China would not match further U.S. duty hikes.
“At the current tariff level, there is no market acceptance for U.S. goods exported to China,” the statement reads. “If the U.S. continues to play the tariff numbers game, China will ignore it.”
The new duties go into effect on Saturday.
On Wednesday, President Donald Trump raised the reciprocal tariff on Chinese products to 125% from 84%. The hike was the second increase since April 2, when he unveiled a reciprocal tariff of 34% on China alongside a raft of new duties on nearly every U.S. trading partner.
The 125% duty comes on top of existing tariffs applied over China’s role in the fentanyl crisis, bringing the total tariff increase on China to 145% since Trump took office.
China’s Ministry of Finance warned, “If the U.S. continues to impose higher tariffs, it will no longer make economic sense and will become a joke in the history of world economy."
During a cabinet meeting on Thursday, Trump again signaled a willingness to negotiate with Beijing on a lasting solution to the tariff issue.
“I have great respect for President Xi,” Trump told reporters, referring to Chinese President Xi Jinping. “I think that we'll end up working out something that's very good for both countries. I look forward to it.”
Treasury Secretary Scott Bessent also sought to comfort investors, arguing that the U.S. will “end up in a place of great certainty over the next 90 days with tariffs.”
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At a press briefing on Friday, White House Press Secretary Karoline Leavitt declined to provide any details on what communications, if any, are taking place between the White House and Beijing, but she reiterated that the president's confidence that a deal could materialize.
"The president has made it very clear he's open to a deal with China," Leavitt told reporters. "He's optimistic."
But ag supply chains are already reeling from the tit-for-tat tariff hikes. On Thursday, Bloomberg reported that Chinese importers have ordered more than 40 cargoes of soybeans from Brazil, set for delivery this summer.
During the trade conflict during Trump’s first term, the U.S. share of China’s soybean imports cratered from 62% two years earlier to just 18% in 2018. U.S. soybean producers never fully recaptured the market lost to Brazil, only recovering to around 50% of China’s total imports in the intervening years.
Brazilian soybean prices have already jumped since Trump took office, according to Joana Colussi from the University of Illinois. Export premiums at Brazilian ports are now at their highest level since the beginning of the Russia-Ukraine conflict.
Colussi warns that if the tariffs persist, the situation could be even worse this time around.
“Brazil is expecting a new record for soybean exports driven by a record harvest of over 6 million bushels and stronger Chinese demand,” she said in a FarmDoc video posted Thursday.
The strong U.S. dollar and significantly improved Brazilian infrastructure since 2018 also put it on a stronger footing than in 2018.
It’s not just Brazil that stands to benefit from the China-U.S. trade decoupling, Colussi added. Argentina’s soybean production is up and its government has slashed export taxes in January.
The global trade war, she said, “is reshaping the soybean market in real-time.”
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