Trump's `tactical tweet' threatens to turn to trade troubles

It may even balance the trade deficit that Washington has with Beijing.

In this game of "who blinks first" however, the stakes are especially high for agriculture if this tactic backfires into a no-deal type situation.

So, what effect would an increase in US import duties on Chinese goods be likely to have on global farm sector markets?

American growers are going to be hit initially on two fronts.

Just as the US corn belt is beginning to dry out and farmers are in the midst of planting there may well now be a few less acres planted to soybeans in the light of this latest "tactical tweet".

China accounts for a vast proportion of the US export volume of soybeans in a normal marketing year (in 2017 it was 60 per cent of all US exports).

American farmers will think twice about planting those extra acres of soybeans now that this main export market is once again under threat.

Even before this "tactical tweet" it was not all roses.

Although China was indeed once again signing contracts for US soybeans, the shipment were very slow.

Whether or not at this stage US growers will be able to plant corn instead of soybeans, or indeed the situation will lead to even more "preventative plant acres" than currently estimated, is unsure.

The second front to hit American farmers will be a significant rise in crop protection prices as the extra level of import tariffs will now be passed onto growers on all imported raw material, technical intermediates and finished crop protection chemicals originating from China.

Like the American farmers, the Chinese will be hit on two fronts, too.

Already reeling from the "Blue Sky" environmental emissions crackdown implemented by the Chinese government in 2018, Chinese growers are seeing increased prices of crop protection products as well as, in some cases, a shortage of products.

More tariffs on those products exported to the US will only exacerbate that trend.

More importantly, China has been addicted to US soybeans imports in recent years and an escalation of the "trade war" is only going to put additional pressure on Chinese growers to "fill the shortfall".

An opportunity in some ways, yes, but China is not necessarily the best place to grow soybeans - at least, not efficiently.

This production refocus will put additional pressure on growers of the core crops of rice, cereals and maize.

The outbreak of African swine fever, reducing the Chinese pig herd by an estimated 20pc in 2018-19, has eased some of the feed grain market pressure this last year, but once the herd is re-populated the shortage of soybeans for stockfeed and the growing demand for pork in China will once again materialise.

As for the wider agricultural sector worldwide, we can expect significant changes in the way trade flows.

China is still importing US soybeans, but now via Argentina as processed oil.

This in turn puts pressure on Argentinian farmers.

The European Union also faces a lot of more imports of soybean oil which puts pressure on already pressured growers of EU oilseed rape.

The US trade is looking for new markets such as Pakistan for its crop, putting pressure on Indian-US relations and the Indian "Make in India" policy.

Russia's already booming soybean growers in the far east of the country gain an added bonus; but in turn, put pressure on growers of the core crop wheat, hurting its export potential which in-turn allows French wheat to once again compete in global markets such as for tenders from Egypt.

The scenarios are indeed quite endless.

So, it's best all round if Trump's tactical twitter tweet is just that, and just a means by which he is stirring the pot.