China's Retaliatory Tariff Playbook: Corn, Wheat, Soybeans In The Crosshairs

President Donald Trump's latest tariff moves are shaking up global trade, but China may have a familiar counterstrike in mind.

According to JPMorgan analyst Brian P. Ossenbeck, agricultural exports—particularly corn, wheat, and soybeans—are prime targets for Chinese retaliation.

Any new developments on this front could be relevant to investors in the Teucrium Corn Fund CORN, the Teucrium Wheat Fund WEAT and the Teucrium Soybean Fund SOYB.

With a history of leveraging tariffs to disrupt U.S. farm exports, Beijing could once again use this tactic to put pressure on American producers and policymakers.

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A Familiar Playbook: Agriculture As A Pressure Point

Ossenbeck highlights that U.S. agricultural exports to China, especially soybeans, have been heavily impacted by past trade tensions. "A study by the U.S. Department of Agriculture found tariffs reduced U.S. agricultural exports by $27 billion in 2018-2019 and soybeans accounted for the majority of the decline at 71%."

If history repeats itself, American farmers could face another round of painful disruptions.

Railroads On Alert

The impact of potential tariffs won't stop at the farms. U.S. rail giants like BNSF (2.5% exposure) and Union Pacific Corp UNP (1% exposure) are directly tied to soybean exports and could feel the squeeze.

Ossenbeck's analysis suggests that retaliatory tariffs on grains could weigh on transportation stocks, adding another layer of volatility to the already embattled Transports sector. Investors in the iShares US Transportation ETF IYT should remain wary of their holdings.

Trade Tensions Fuel Import Rush

Meanwhile, data from JPMorgan indicates that importers have been bracing for impact. Ossenbeck points to a "pull-forward of imports from China that started in 2H24 and appears to have continued into early 2025."

January containerized imports hit an all-time record, signaling that businesses have been stockpiling goods ahead of expected tariffs.

A Volatile Road Ahead

While a 30-day delay on tariffs for Mexico and Canada brought temporary relief to markets, "we are hardly sounding the ‘all clear' after the first salvo in what could be a long and volatile trade war on multiple fronts," says Ossenbeck.

Investors should stay alert, as China's next move could be just around the corner—potentially hitting U.S. agriculture where it hurts most.

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