You may recall that farmers in Texas were extremely concerned that Trump's budding trade war with China would cost them dearly as Texas exports a significant amount of sorghum and beef to China.
It looks like their fears have manifested.
According to an exclusive report from Reuters, a convoy of ships exporting sorghum out of Texas were literally stopped in the middle of their voyage and turned around because China imposed new fees intended to prevent American suppliers from dumping their shipments.
Twenty ships carrying over 1.2 million tonnes of U.S. sorghum are on the water, according to export inspections data from the USDA's Federal Grain Inspection Service. Of the armada, valued at more than $216 million, at least five changed course within hours of China's announcing tariffs on U.S. sorghum imports on Tuesday, Reuters shipping data showed.
The five shipments, all headed for China when they were loaded at Texas Gulf Coast export terminals owned by grain merchants Cargill Inc [CARG.UL] or Archer Daniels Midland Co (ADM.N) would be liable for a hefty deposit to be paid on their value, which could make the loads unprofitable to deliver.
Beijing, which is probing U.S. imports for damage to its domestic industry, announced Tuesday that grains handlers would have to put up a deposit of 178.6 percent of the value of the shipments.
American suppliers are now looking for other markets to sell the shipments in, but China is (or was) the biggest market for it and other countries may not be interested.
Interestingly, shipments of Australian sorghum surged in value after this week's event because they are not subject to the tariffs and fees imposed on American sorghum.
Industry analysts who spoke to Reuters say the ships on the water carrying American sorghum will probably have to sell their stock at a discount to get rid of it.
“They’re not in a strong bargaining position considering they’ve got shipments from across the ocean that they have to sell and get the boats cleared out,” said economist Daniel O’Brien of Kansas State University in the top U.S. sorghum-producing state. [...]
“This tit for tat has to stop, and talks to find reasonable and lasting solutions must begin, for the good of U.S. agriculture and the customers we have spent decades working to win as loyal buyers,” said Tom Sleight, president and CEO of the U.S. Grains Council.
In related news, Bloomberg reports that financial officials from the G-7 gave Treasury Secretary Steve Mnuchin an earful about Trump's trade war during a meeting yesterday, but they made no progress toward resolving Trump's insatiable craving for chaos.
Other nations are concerned that Trump's trade war will spill over and slow global growth.