Sell US soybeans and get played by China

I have a bad feeling about the US-China trade negotiations. One gets the impression President Donald Trump is so keen for a deal that he’s walking into trouble.

One thing China is playing him on is soybeans. Trump has called for a 4x increase in Chinese purchases of US soybeans. However, the Chinese aren’t buying and instead are buying soybeans from the Brazilians, who, according to reports, can meet China’s entire demand.

But I’ll bet Beijing eventually “concedes” on soybeans and agrees to buy a lot of American ones.

One trade expert told me: “I am reasonably confident that – thanks to that other export to us, Salt Typhoon (PRC government-backed hackers) – the Chinese knew the administration would make this ‘demand;’ Beijing might have even ‘incepted’ the idea and then spun up the soybean industry to lobby for it.”

Chinese trade warfare has indeed successfully influenced US soy farmers so that they are literally and psychologically totally dependent on China.

The Chinese Communist Party (CCP) wants to convert that sense of dependence into farmers appealing and lobbying Washington, DC, to keep the soy trade lines open and free of interference, because it is their “lifeline.” And they are, after all, voters who can make a difference on who sits in Washington.

A recent letter from the American Soybean Association to Trump suggests the Chinese strategy of “pressure by local proxies” is working. The letter notes:

“US soybean farmers cannot survive a prolonged trade dispute with our largest customer … Mr. President, you have strongly supported farmers and farmers have strongly supported you. We need your help.”

One marvels at US soybean farmers’ total ignorance of the customer. Who would be foolish enough to make China their chief customer? Apparently most US business and industry, if the last 40 years are anything to go by.

So, suppose China agrees to buy more soybeans from the US. If you see the world in bilateral trade deficits and surpluses, “making” the PRC buy more soybeans looks like winning.

And it is, for Archer Daniels Midland, Bunge, Cargill maybe and COSCO, which will ship the beans and maybe do a little intelligence collection in the Port of Long Beach while loading.

Trump can claim victory and in exchange, he goes easy on China on something else in return – say relaxing chip and tech exports. And he ignores fentanyl, too.

Well over half a million Americans killed by Chinese-origin fentanyl since 2013 – and still no punishment from any US administration – including the first Trump administration.

A 20% fentanyl tariff? That only hurts the Chinese from the pain of pinching themselves to keep from laughing.

But even better from China’s own “art of the deal” perspective is that China takes the American soybeans and transforms them (in China or a third country) into products like pharmaceuticals, cosmetics, adhesives, supplements, printer ink and many others.

It exports these back to us in a higher-value-added form, and earns a ton of foreign exchange, far more than the amount it paid for the “raw” beans.

And keep in mind that soybeans are commodities. Why do we think those US soybeans will stay in China? Maybe they will become food aid to some country in which the CCP wants to grow its influence. Maybe they will be bartered for something else China wants?

I don’t begrudge US soybean farmers more demand for their crops and others the fun of speculating on soybean prices. But the trade deficit is not our biggest problem.

I’d prefer to withhold product from China and sell like crazy elsewhere to reduce our dependence on them as a market.

Beijing’s current stranglehold over the Trump administration via America’s self-inflicted “rare earth” dependency alone ought to be alarming enough to prompt a change in behavior.

So if China agreeing to buy US soybeans is touted as a success, maybe it’s instead evidence of a game we are losing.

Grant Newsham is a retired US Marine officer and former US diplomat. He’s a fellow at the Center for Security Policy and the Yorktown Institute, and is the author of “When China Attacks: A Warning to America.” Follow on X @NewshamGrant

This article first appeared on AND Magazine and is republished with the author’s permission.