OMAHA (DTN) -- Commodity markets, especially soybeans, joined the stock indexes in moving lower on Friday after China hit back with a 34% tariff on all products from the United States.
As DTN's closing market commentary noted, "Friday was overall a red day across markets, both financial and agricultural, as investors and traders continue to attempt to sort out the consequences -- positive or negative -- from this week's tariff action announced by the Trump administration."
May soybean futures dropped more than 40 cents at one point on Friday. The November contract for the not-yet-planted soybean crop closed down 32.5 cents for the day.
Soybeans were already facing a 15% tariff. Under China's announcement Friday, soybean sales to China could face a 49% tariff starting April 10.
Once other tariffs are factored in, the U.S. Meat Export Federation noted, beef exports to China could face a 56% tariff, and pork tariffs could be as high as 81%.
MARKET REACTION
Looking at the market reaction for soybeans, DTN Lead Analyst Rhett Montgomery noted most of the export sales in the books for the 2024-25 crop have already met more than 90% of USDA's 1.825-billion-bushel (bb) forecast for the marketing year.
While China has already turned to Brazil for its spring import needs, sales for the U.S. fall crop typically take shape over the summer, Montgomery noted.
"The new crop is definitely in the crosshairs to see some damage if we can't get some sort of resolution with China before long," he said.
There appeared to be some upside opportunities for new-crop soybeans after USDA came out March 31 with an expected 83.5 million planted acres, down 3.6 million acres from last year. But the tariffs quickly tamped down that rally.
"It really takes the wind out of the market sails, to say the least," Montgomery said. "Overall, China still buys half of our soybeans. If they are out, it's going to hurt, no doubt about it."
It's a double-edged sword because soybean prices will likely remain low. "But the silver lining is the low price will likely attract other buyers in the world to pick up at least part of the slack," Montgomery said.
SALES TO CHINA FALLING
Agricultural exports in 2024 were valued at $24.6 billion as sales have fallen since China bought a record $38.1 billion in 2022 as part of the Phase One Agreement signed by Donald Trump two years earlier.
Sales to China continue to fall dramatically. In the first two months of 2025, sales to China were valued at $2.5 billion, according to USDA. That's down 59% from $6.1 billion for the same period a year ago.
Soybean sales to China also peaked in 2022 at $17.9 billion in value but were down to $12.8 billion in 2024. Soybean sales so far in the first two months of 2025 are pegged at $1.36 billion, down from $3.7 billion in the first two months of 2024.
SOYBEAN, CORN GROUPS CALL FOR TRADE TALKS
The American Soybean Association called for a "China Phase Two" deal to reinvigorate soybean sales. ASA noted, "Despite the gloom of increasing tariffs across the globe and what that may mean for their businesses, soybean farmers are hopeful the administration has a plan to quickly negotiate with impacted countries."
Kentucky farmer Caleb Ragland, president of the American Soybean Association, said, "We are hoping that from obstacles can come opportunity and that the administration will swiftly work with the affected countries to create new market access opportunities for U.S. soy and other U.S. products in these markets so these higher tariffs can be removed. That includes pursuing a Phase Two Trade Agreement with China."
Corn futures on Friday again proved they are somewhat insulated from Chinese retaliatory tariffs because corn is a lot less reliant on China for exports.
Overall, about 15% of the U.S. corn crop is exported -- pegged at 2.45 bb for the 2024-25 crop year. "So, we are aware of the potential effects that these new tariffs could have on corn growers who are already faced with a troubling economic landscape," Illinois farmer Kenneth Hartman Jr., president of the National Corn Growers Association (NCGA), pointed out.
Hartman called on negotiations with other trading partners and suggested Brazil should eliminate its 18% tariff on ethanol imports, "which is a particularly egregious practice and one that we are pleased to see the president address. The country should move to quickly come to the negotiating table so that we can rectify this situation."
BEEF AND PORK TARIFFS HIGH
The U.S. Meat Export Federation pegged the new Chinese tariffs at 81% for pork and 56% for beef. That will create more obstacles to selling in China, but USMEF also noted that the new U.S. tariffs are creating uncertainty for buyers of U.S. beef and pork overseas.
"USMEF is hopeful that instead of retaliating, other trading partners will choose to lower trade barriers for U.S. exports," said Dan Halstrom, USMEF's president and CEO. "This would certainly ease the concerns of importers and reduce volatility in the global markets."
U.S. beef exports to China and Hong Kong are already stalled because China has not renewed the license registration for U.S. meatpackers that expired in mid-March. According to the Meat Institute, this affects around 390 facilities, and negotiations continue to recertify those plants.
Beef sales to China and Hong Kong last year were $1.9 billion, with China being the second-largest market for U.S. beef behind Mexico.
Chinese pork purchases from the U.S. were down 10% last year, but still pegged at $1.27 billion in value, making China the No. 3 market for pork behind Mexico and Japan.
The Chinese government on Friday also suspended chicken imports from major companies such as Pilgrim's Pride, Tyson Foods and Wayne-Sanderson Farms. China imported roughly $500 million in chicken and other poultry products last year.
THE FED AND TRUMP
Jerome Powell, chairman of the Federal Reserve, spoke to business journalists Friday at an event on C-SPAN. While making a point not to criticize policies, Powell said the U.S. economy has "dimming expectations" because uncertainty is high, and the downside risks have risen. Powell still forecasts a solid outlook, but growth will slow because of higher prices.
"While uncertainty remains elevated, it's now becoming clear tariff increases will be significantly larger than expected," Powell said.
The Fed chairman suggested the tariffs could lead to longer-term inflation expectations. Powell also said it was too soon to say how the Central Bank will act on interest rates.
"It is just too soon to say what the appropriate monetary response will be," Powell said.
On social media, President Trump called on the Federal Reserve to lower interest rates. "This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always 'late,' but he could now change his image, and quickly. Energy prices are down, Interest Rates are down, Inflation is down, even Eggs are down 69%, and Jobs are UP, all within two months -- A BIG WIN for America. CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!"
In different posts, Trump also highlighted a call with the leader of Vietnam, and he criticized China for its retaliatory tariffs. "CHINA PLAYED IT WRONG. THEY PANCKED -- THE ONE THING THEY CANNOT AFFORD TO DO!" Trump stated.
Separately, California Gov. Gavin Newsom, a Democrat and Trump antagonist, called for trading partners to suspend any retaliatory tariffs against goods from his state and suggested he would pursue trade deals on his own.
For more, see "Trump Details Sweeping Tariff Plans" here: https://www.dtnpf.com/….
Also see "Monarch CEO: Tariffs Bring New Risks to US Ag; China, Europe Try to Understand Impacts" here: https://www.dtnpf.com/….
To see DTN's Closing Grain Comment video, go to https://www.dtnpf.com/….
Chris Clayton can be reached at Chris.Clayton@dtn.com
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