Trade officials of the Republic of China (Taiwan) have signed a letter announcing that they will purchase US$1.56 billion worth of soybeans from farms in Minnesota and Iowa, Reuters reported on Sept. 27, citing a statement made by Minnesota’s governor Mark Dayton.
The letter of intent comes at a time of high trade tensions between communist mainland China and the United States. The U.S. Trump administration has slapped tariffs on over US$250 billion dollars’ worth of Chinese export goods, to which Beijing has responded with its own tariffs, including on American soybeans.
According to Reuters, Taiwan’s Agricultural Trade Goodwill delegation plans to purchase between 3.2 million and 3.9 million tons of U.S. Midwestern soybeans this year and in 2019. Taiwan is currently the sixth-biggest importer of American soybeans, buying 1.4 tons in 2017.
Loren Puette, director of the consulting company ChinaAg, told Reuters that Taiwan was “looking to cement ties with the U.S.” and decided that purchasing more soybeans would help Taipei in this aim.
The letter of intent comes after Minnesota agricultural officials completed a trade mission to Taiwan last month during which they met with Chairman Yau-Kuen Hung of the Taiwan Vegetable Oil Manufacturers Association.
Mainland China considers Taiwan a renegade province, while the Taiwanese state was founded after World War II when the Republic of China recovered the island from Japanese rule, but then lost the entirety of mainland China to communist rebels. To varying degrees, the United States has supported the ROC as an independent government since then, despite recognizing the Chinese Communist Party as the legitimate authorities of mainland China in 1979.
The trade war between the United States and China, promoted by the latter’s duplicitous trade practices and massive theft of intellectual property from American and other foreign partners, started this spring. The American soybean industry has been badly affected, while China struggles to compensate for the lost U.S. imports by hastily ramping up production in its own agricultural sector.
However, China only produces a fraction of its soybean demand. Generally, it buys soybeans from Brazil in the summer, and when the harvest there finishes, it sourcing shifts to the United States. Because of the tariffs, soybean prices in China have grown enormously.