Beijing's tit-for-tat trade spat with Washington could come back to bite China when it comes to soybeans and even the grain sorghum to some extent.

Analysts say China can get soybeans from South America but still won't get enough to meet its overall domestic needs. Also, there's a premium price on Brazilian beans now so U.S. supplies look more competitive to other buyers.

Earlier this month, Beijing warned it might impose a 25 percent tariff on U.S. soybeans as well as duties on other major U.S. agricultural products, including corn, wheat, cotton and beef. It was a retaliatory step after President Donald Trump proposed tariffs on everything from Chinese consumer electronics and robotics to aerospace products.

Beijing 'in a pickle'

"Eventually, China will need our soybeans, and they'll be in a pickle," said David Maloni, chief commodity strategist at the American Restaurant Association. "They're going to have to pay the tariff and they need them, and that will probably sometime in the mid to late summer."

China buys about two-thirds of the world's soybean exports, using most of it for soy protein to feed roughly 700 million pigs in the country or to make cooking oil.

"This is a lose-lose for China," said Wallace Tyner, an agricultural economist at Purdue University. "They grow only 15 percent of their soybeans and depend on imports for their whole animal feed system and on the oil for human consumption. And so when the price of something that important to your imports goes up, it negatively effects your economy."

China could see $3 billion hit

In the medium term, the 25 percent soybean tariff would benefit Brazil's economy by $2.7 billion annually, but for China it would represent an annual economic loss of about $3 billion, according to estimates from a Purdue study. It also estimates the tariff would cost the U.S. an economic loss in well-being of some $3 billion annually.

Already, Beijing's proposal to impose a 25 percent tariff on U.S. soybeans has caused prices of soy in Brazil to go higher and benefited South American suppliers.

Brazil's remains the largest seller of soybeans to China but its exports to China tend to be exhausted in the fall months or December.

"China will be forced one way or another to either pay up for the U.S. beans after putting on a 25 percent import tariff, or if the tariff doesn't go into place until a few months from now they are going to be heavy importers of U.S. beans."

"Brazil will run out of soybeans to export fairly quickly in 2018, if China redirects 90 to 95 percent of their attention to importing Brazilian beans," said Terry Reilly, an analyst with Chicago brokerage Futures International.

China also has to contend with tighter supplies from Argentina, the world's third-biggest soybean exporter.

Argentina drought cuts supplies

A prolonged drought in Argentina means its domestic harvest is expected to be significantly lower. As a result, Argentina's crushers — producers of soymeal and soy oil — have been importing more supplies of U.S. beans. Earlier this month, it was reported that Argentina made its biggest order of U.S. soy since 1997.

"China will be forced one way or another to either pay up for the U.S. beans after putting on a 25 percent import tariff, or if the tariff doesn't go into place until a few months from now they are going to be heavy importers of U.S. beans," Reilly said.

China buys roughly half of U.S. soybean exports, or about $14 billion annually, according to the U.S. Department of Agriculture. And roughly one in three rows of soybeans grown on the nation's farms goes to the world's second-largest economy, according to the American Soybean Association.

"In the short run, China may not have many options because the planting decisions have already been made in different parts of the world," said David Laborde, a researcher at the International Food Policy Research Institute in Washington D.C.

Brazil adding soy acres

As for the longer term, Laborde said China could benefit from South American countries adding more bean acreage to help meet more Chinese demand. Also, the researcher said Beijing could help cushion the loss of U.S. product by diversifying its sourcing and investing overseas to grow supplies in Africa and elsewhere.

Experts point out that the current trade rift with China could still work itself out. They suggest China is using soybeans in particular as perhaps a "bargaining chip."

"By even threatening that tariff, China in fact already raised the price for what they're going to have to pay for beans now," said Sam Funk, a St. Louis-based grains and oilseeds analyst with RaboResearch. "Why would you announce that threat other than to get the [Trump] administration to back off theirs and trying to create some kind of, if you will, bargaining chip."

Indeed, after China proposed the 25 percent tariffs on U.S. soy products April 4, it resulted in the price of Brazil soybean shipments peaking at premiums of up to 200 cents above Chicago May soybean futures. The wide premium to the U.S. product has since retreated some although still significant.

Scoring EU business

Analysts say another short-term option for Brazil is to shift some exports they do now from other countries to China. In doing so, it would also allow the U.S. to enter or expand markets exited by Brazil — and the higher price for South American beans could in turn boost interest in U.S. supplies, too.

In particular, the European Union — the world's second-largest importer of soybeans — could buy more American beans. The EU imports more than 35 million tons of soybeans yearly for mostly animal feed and produces less than 1 million tons of the crop.

Sorghum fight

Meantime, Beijing escalated the ongoing trade fight with the U.S. on Tuesday by slapping an anti-dumping duty of 179 percent on U.S. sorghum imports.

In a release Tuesday, China's commerce ministry said an investigation found there was "dumping of imported sorghum originating in the United States, and that China's domestic sorghum industry was substantially damaged."

In taking the action, the Chinese are delivering a blow to farmers in Texas and Kansas — the two largest producers of sorghum.

"They'll be demand for the grain but probably just at a lower price," said Dan Atkisson, a sorghum farmer in northwest Kansas. "China was a premium export market."

'Clearly a political decision'

The Trump administration lashed out at Beijing for targeting sorghum with the hefty dumping duties.

"This is clearly a political decision by the Chinese and we reject their premise," Agriculture Secretary Sonny Perdue responded Wednesday. "Our sorghum producers are the most competitive in the world and we do not believe there is any basis in fact for these actions."

China is the top buyer of U.S. sorghum, which it uses for animal feed and to make liquor. Last year, China bought about $1.1 billion worth of U.S. sorghum.

National Sorghum Producers, a trade group, this week called Beijing's decision part of "a broader trade fight in which U.S. sorghum farmers are the victim, not the cause. And U.S. sorghum farmers should not be paying the price for this larger fight."

Grain cargoes in limbo

Sorghum tends to be a cheaper feed alternative to corn, but Beijing's action effectively shut the door to American producers. In fact, American sorghum destined for China is now in limbo.

"Our global staff is now focused on finding homes for the substantial amount of U.S. sorghum that is in transit to China now or has already been sold but not shipped, as well as new crop that will be harvested in the coming months," the U.S. Grains Council said in a statement.

Mexico has traditionally been the second-largest buyer of U.S. sorghum after China. But Japan has come in to purchase some supplies and the EU is another option.

For China, the tariff situation has made Australian sorghum more attractive. Even so, Reuters reported Wednesday that prices for cargoes of Australian sorghum were up after the anti-dumping duties were slapped on the U.S. grain. Australian prices are getting support as a result of a smaller crop, too.

"The Chinese need to satisfy their animal feed uses," Reilly said. "They imported it because it was a cheap product. So now they're forced to go out and buy more expensive feed from other countries or crush more soybeans and rapeseeds to get to more meal."