Taking a “show me” stance, White House economic adviser Larry Kudlow said on Monday he expected China to roll back tariffs on U.S. farm exports promptly and begin trade reforms in line with the trade deal struck by President Trump and Chinese President Xi Jinping. The White House said over the weekend that China will make “very substantial” purchases of agricultural, energy and industrial goods but analysts saw no firm commitments in the statement.
Until the trade war began last summer, China was the No. 1 market for U.S. farm exports and soybeans were the leading commodity. Soybean futures prices soared on Monday to their highest level since August on hopes that China would be back in the market for U.S. soybeans.
President Trump said on social media, “Farmers will be a very BIG and FAST beneficiary of our deal with China. They intend to start purchasing agricultural product immediately. We make the finest and cleanest product in the World, and that is what China wants. Farmers, I LOVE YOU!”
“We would love to resume the trade,” said Agriculture Secretary Sonny Perdue during a visit to Chicago. “Our farmers have borne the brunt of retaliatory tariffs and I’d love to see them removed.”
The USDA and the White House budget office are nearing a decision on a second round of Trump tariff payments, Perdue told farmers at a DTN/Progressive Farmer conference. The administration allotted $4.7 billion for the first round to cotton, corn, milk, hog, soybean, sorghum, and wheat producers.
China and the United States presented different accounts of the informal agreement reached over dinner in Buenos Aires on Saturday — “A ‘He Said, Xi Said’ Trade Deal,” as the Los Angeles Times dubbed it.
The White House said “China will agree to purchase a not-yet-agreed upon, but very substantial amount of agricultural, energy, industrial and other product” and it would “start purchasing agricultural product from our farmers immediately.” The nations also would begin a 90-day push to resolve disputes over Chinese trade practices.
Foreign Minister Wang Yi said China “is willing to expand imports according to the needs of the domestic market and the people, including the purchase of marketable goods from the United States,” according to a Chinese statement. There was no mention of agricultural goods or a deadline for agreement on trade reforms.
“We’ll see,” Kudlow told reporters, recounting Chinese assurances that action would be immediate on broad-based and detailed issues. “I presume it would mean things like car tariffs and various transactions in, you know, agriculture, industry and so forth — energy … it could mean licensing, ownership.” When asked about agriculture, he said, “My expectation is that China will roll back these tariffs quickly.”
Long-time trade analyst Paul Drazek said more details were needed from the Trump-Xi dinner. “It’s really unclear to me if they’re going to be buying a lot of agricultural product and it’s going to be good for our farmers,” he said on the “Adams on Agriculture” program. “Is it going to be more than we lost already. I have my doubts.”
Iowa farmer John Heisdorffer, president of the American Soybean Association, said the U.S.-China agreement “is the first positive news we’ve seen after months of down-turned prices and halted shipments.” If China re-opens its market to U.S. soybeans, it will be “a key confidence-building step.”