After months of posturing, the first cannonballs in the trade war between the U.S. and China were fired on Friday morning, as each nation officially imposed $34 billion in tariffs on one another’s exports.
President Trump indicated that he will impose tariffs on another $16 billion in imports next week, with the possibility of extending the taxes to $500 billion of Chinese imports.
For commodities traders, soybeans are the most affected market, as China’s tariffs are directed against U.S. soybeans. With the tariffs officially in place, beans fell to $8.34 per bushel, the lowest level in nine years.
However, optimistic traders bought beans on Friday morning, citing an adage, “the time to buy is when there’s blood in the streets.” Recent reports are suggesting that this year’s soybean crop is record large due to great weather, and the world’s biggest buyer now has taxes in place against our soybeans, leading many to believe that things cannot get much worse. As of midday Friday, soy had soared 30 cents (+3.5%) off the low.