In growing signs that a trade resolution between the US and China may not be reached before November, China’s government has sought to pressure President Trump into easing tariffs by targeting his voter base ahead of key mid-term elections.
China Daily – the largest English-language state-owned newspaper – on Sunday took out a four-page advertising supplement in Iowa’s most widely-read newspaper, quoting US economists and lobbyists critical of Trump’s trade policy with China.
As well as an article headlined “A President’s Folly”, the advertorial in the Des Moines Register also included criticisms of US trade policy by the American Soybean Association and highlighted President Xi of China's fondness for the state.
Iowa is the second-biggest soybean producing state in the US and a key support base for Donald Trump in mid-term elections to be held in just six weeks.
With China levying a 25% import tax on soybean imports from the US, Iowa farmers are expected to be the hardest hit by the trade war, with a report by Iowa’s state university suggesting farmers could lose more than $600 million in revenue.
The move comes amid reports that China has cancelled upcoming trade talks with the US and adds to fears that a deal will not be struck before November, which, if true, will likely be more bearish for soybean futures.
“The Chinese are not likely to agree to anything with Trump before the US elections in November, as that would be seen as politically rewarding the Administration for playing hardball,” Charlie Sernatinger, an analyst with ED&F Man wrote in a report to clients last week.
Earlier this month, Charlie Carey, a board member at CME Group, told a trade conference in Sao Paulo that the main reason futures were above $8/bu — despite bearish fundamentals — was the "risk premium that this whole thing gets resolved soon."
Soybean futures were down 1% in early trade at $8.39/bu for November delivery.
Sunday's advertorial was published a day before the trade dispute between the world's two biggest economies is set to escalate with new tariffs set to kick in on Monday.
The US is due to slap taxes on $200 billion of Chinese goods and China is to tax $60 billion worth of goods in return.
In November, all of the seats in the Republican-controlled House of Representatives will be up for election, while a third of all senators in the Republican-controlled Senate will face the ballot box.
Recent polls suggest that Republicans could lose control of both houses of Congress. AGRI Census.
