As Simon Lester noted, President Trump and European Commission President Jean-Claude Juncker caught the world by surprise Wednesday when they announced a step back from the rapidly escalating trade war between the United States and European Union.
In his statement, Trump added this bit of news:
And the European Union is going to start, almost immediately, to buy a lot of soybeans—they’re a tremendous market—buy a lot of soybeans from our farmers in the Midwest, primarily. So I thank you for that, Jean-Claude.
… Secondly, we agreed today to a strengthen and [sic] strengthening of our strategic cooperation with respect to energy. The European Union wants to import more liquefied natural gas—LNG—from the United States, and they’re going to be a very, very big buyer. We’re going to make it much easier for them, but they’re going to be a massive buyer of LNG, so they’ll be able to diversify their energy supply, which they want very much to do. And we have plenty of it.
Simon qualified that news in his post: “This was probably going to happen anyway because of market shifts and other factors.”
To say the least.
Concerning soybeans, a month ago Bloomberg explained that EU imports of the crop are set to rise dramatically as a result of another U.S. trade war, in this case with China. China has slapped retaliatory tariffs on U.S. soybeans, and Brazil is set to supplant the United States in that market. American farmers now have a surplus of soybeans—which the EU is happy to buy so long as the price is right.
This is reminiscent of the Arab oil embargo of the 1970s. In that case, the Arab states simply sold their oil to someone else and the United States bought its oil from someone else. (Well, we would have, if we hadn’t messed things up by putting a price cap on oil.)
Commodities like oil and soybeans move in world markets, and so if one particular buyer and one particular seller aren’t getting along, there are plenty of other buyers and sellers to step in, so long as someone’s willing to pay for the extra handling costs. (Don’t be surprised if Chinese consumers and U.S. farmers are the ones stuck with those costs for the soybeans.)
So the soybean “concession” is really just the EU doing what it was going to do anyway.