Tariffs have caused U.S. soybean exports to China to almost completely dry up. This, in turn, has led to many farmers selling their soybeans to Iran.
In retaliation for Trump administration tariffs on Chinese goods, China imposed tariffs on $34 billion worth of imports from the U.S. including soybeans. In the first seven weeks of the 2017-18 marketing year, the U.S. exported 239 million bushels of soybeans to China. For the first seven weeks of the 2018 to 2019 marketing year, that number had dropped to 7.4 million bushels.
In September 2017, China bought $1.1 billion worth of soybeans, but in September 2018, it only bought $24 million. Before the tariffs, China was the largest buyer of U.S. soybeans, purchasing $12.25 billion worth of the product in 2017.
The loss of the Chinese market has caused the price of U.S. soybeans, which were planted in large quantities with the assumption that they would be sold to China, to drop. Reuters reported that the price might drop so low that it would be cheaper for Brazilian soybean processors to buy U.S. crops than to buy locally.
Soybean exporters have been frantically trying to find other markets to offset the impact of the tariffs as much as they can.
What about Iran?
Forced to look for other buyers for its stockpiles of soybeans, U.S. soybean exporters have turned to Iran. While the U.S. has imposed tough sanctions on Iranian banking, energy, and shipping sectors, these do not apply to agricultural commodities.
According to Bloomberg, 873,420 tons of U.S.-grown soybeans worth about $211 million have already been shipped to Iran this year. Last year, the U.S. shipped $25.7 million in soybeans to Iran all year. While no soybeans were sold to Iran in the first half of 2018, according to the Wall Street Journal, in August the U.S. shipped $140 million in soybeans to Iran and in September it shipped another $44 million.
According to U.S. Census Bureau data, U.S. exports to Iran through September 2018 hit $300,300,000 — already double the $136,000,000 it exported to Iran last year.
In July, the White House announced that it would be extending $12 billion in emergency aid to farmers hit by foreign tariffs. Other agricultural exports including sorghum have also been negatively impacted by these tariffs.
President Donald Trump has frequently praised his tariffs, even going so far as to call tariffs in general the “greatest.”