American farmers may benefit doubly during efforts to end the Sino-U.S. trade war, suggested President Trump over the weekend. They will get billions of dollars in payments intended to mitigate the impact of the trade war on the agricultural sector, and China will buy “a tremendous amount” of U.S. food and ag exports while bilateral negotiations are ongoing.
“I think our farmers are going to end up being the great beneficiary,” said Trump, who announced an agreement with Chinese President Xi Jinping to resume trade talks that broke down in May. The leaders met in private on the sidelines of the G20 summit in Osaka, Japan. Trump said U.S. tariffs would remain in place on $250 billion of Chinese products but he would not impose duties on other imports from China. He also eased restrictions on doing business with Huawei, a Chinese telecommunications company.
“China is going to be buying a tremendous amount of food and agricultural product and they’re going to start that very soon, almost immediately. We’re going to give them lists of things that we’d like them to buy,” said Trump on Saturday.
There was no immediate confirmation from China of plans for major purchases nor did the White House say where or when trade talks would resume. Going into the meeting with Trump, Xi said, “Cooperation and dialogue are better than friction and confrontation.” The U.S.-China relationship should be based on coordination, cooperation and stability, he said.
At various points this year, U.S. officials have trumpeted upcoming purchases, supposedly discussed during closed-door negotiations with China, that have not materialized. Agriculture Secretary Sonny Perdue told a farm group last week that China has purchased only 6.7 million tonnes of the 20 million tonnes of goods that it proposed to buy. “You would be really, really happy,” said Perdue at sales that would be “multiples of what we are already are doing” if an agreement is reached.
China, the world’s largest importer of soybeans, rice and cotton, used to be the No. 1 buyer of U.S. farm exports, with purchases around $21 billion a year, but will drop to fifth place this year due to tit-for-tat tariffs, according to USDA estimates. Some analysts have questioned if the United States has the capacity to satisfy an upsurge in demand by China or if large orders would divert sales ordinarily made to other nations, with a limited overall gain.
The administration paid more than $8.5 billion in cash to farmers and ranchers to cushion the impact of trade war on their 2018 production. After trade talks broke down in May, Trump announced that up to $14.5 billion in cash would be paid to producers for trade losses on this year’s crops. Details of the Market Facilitation Program, as the stopgap trade aid is called, have not been announced.
Trump said, “[W]e’re distributing it among farmers who have been hurt because they have been used as a pawn so China could get a good deal.” The first round of payments could be made late this month or in August, according to USDA. The payments might overlap with a resumption in sales to China.
Private exporters reported on Friday the sale to China of 544,000 tonnes, or 19.96 million bushels, of soybeans, worth $184 million at current prices at the Chicago futures market.
The transcript of the Osaka news conference is available here.