China’s buying lots of Brazilian soybeans. That’s good news for Brazilian soybean sellers and bad news for Brazilian soybean buyers.
What it means: In theory, trade is good for everyone. If I want to sell something you want to buy, a trade will makes us both better off. But in reality trade is tricky, and things that are good for some people are bad for others. You could say it involves - and we’re sorry about this - trade-offs. (Well, we laughed).
This is what’s happening with the Brazilian soybean. Soybeans are useful: they’re mashed up into food for farm animals and oils for cooking. So countries that don’t grow a lot of them (like China) buy them from countries that do. China used to buy most of its soybeans from the United States. But then came Trump.
Trump slapped a load of tariffs (essentially taxes on stuff that crosses borders) on Chinese goods coming into America. China retailated, and one of the things they put tariffs on was American soybeans. That makes them much more expensive for Chinese businesses to buy, so they’ve ditched American soybeans (which was the whole point of those tariffs) for cheaper options. Enter Brazil.
China needs a lot of soybeans (it eats a lot of pork, and pigs eat soybean feed) and it’s willing to pay to ensure it gets them. The result is Brazilian prices for soybeans have gone up by more 30 percent this year. That’s great for Brazilian soybean sellers, who are making about a third more profit than they were. But it’s not good for Brazilians who want to buy soybeans, who are both having to pay more for them and struggling to get their hands on them now so many are being sent to China.
Prize for anyone that knows how many times we just said soybean.
We’ve moved beyond a world where your country was all that matters. Our economies have become bigger than we realise. Things we use are less and less likely to come from our own country and more likely to have been imported from a country across the globe – this has become so normal that we’ve forgotten what a huge implication this has for how our economies work…