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Winning: Trump, Xi close to ‘trade deal’ as Chinese farmers warn government they’ll need subsidies to compete with U.S. farm products

By Jon Dougherty

As official Washington preoccupies itself with the latest alleged “crisis” involving some aspect of the Trump administration, the White House has been quietly but steadily making progress on its key trade objectives.

Last year POTUS Donald Trump announced that his negotiators had reached a deal with Mexico and Canada to rework NAFTA into a new United States Mexico Canada Trade Agreement (USMCA). The agreement awaits action in the U.S. Congress and the legislatures of the other two countries, though it’s passage now that Democrats control the House is in doubt.

Still, the president’s team continues to make progress in other aspects of trade, especially with China. Like his bid to rework NAFTA was panned by #NeverTrump critics, so, too, has his tariff approach to dealing with the huge trade imbalances between the U.S. and China. But when we separate the hyperbole from the results, it appears as though the president’s approach is working.

The Wall Street Journal reported on Sunday that the administration was close to reaching a new trade deal with China ahead of a meeting between President Trump and Chinese President Xi Jinping this month at his Mar-a-Lago resort in Florida.

Details of the agreement were hashed out last month during meetings between U.S. and Chinese negotiators in Beijing and Washington. Those details will be on the table when Trump and Xi get together, the WSJ reported.

However, the paper cautioned there are still some hurdles to overcome because of opposition in some circles in both countries.

The New York Post reported:

As part of the deal, China would reduce tariffs on imported vehicles to below the current level of 15 percent and increase the purchase of US goods, including an $18 billion buy of natural gas from Cheniere Energy Inc., the report said.



Chinese officials have said in their talks that the US would need to remove tariffs on $200 billion in Chinese goods to bring the deal to a close, Bloomberg reported.

The $200 billion number is the amount the Trump administration imposed on China after Beijing responded to the US’ first round of tariffs on $50 billion worth of goods.

In addition, the Chinese have reportedly agreed already to purchase more U.S. agricultural products, especially soybeans — which has Chinese farmers scrambling for relief already.

The South China Morning Post reported that Chinese farmers are appealing to Beijing for subsidies to offset losses from losing out to American farm products, which they say are produced far more efficiently and at lower cost, something they can’t compete with:

The Chinese government needs to improve its fiscal and industry policies to protect domestic producers expected to be squeezed by higher imports of US agricultural products, according to agribusiness tycoon Liu Yonghao.

“More imports of soybeans and corn will help reduce the cost of raising livestock, but Chinese farmers, and the animal feed industry in China will definitely be under pressure,” Liu said on the sidelines of the Chinese People’s Political Consultative Conference on Sunday. “Agriculture in the United States is much more efficient than in China and they will have the upper hand.”

His comments echo concerns about whether China can maintain a balanced farming structure to ensure food security as it prepares to buy more American farm products as part of concessions to end the country’s long-running trade war with the United States.

Last month, Chinese Vice Premier Liu He and President Trump agreed that Beijing would purchase an additional 10 million tons of U.S. soybeans. In addition, China would annually buy $30 billion worth of additional U.S. farm products including soybeans, corn, and wheat, on top of pre-trade war levels, Bloomberg reported.

For Chinese farmers to already be appealing to their government for relief signals another win for the Trump trade negotiators. China has no choice but to import soybeans; its own farmers cannot grow enough to satisfy the country’s needs. At the same time, the Communist Party leadership can’t afford to stoke unrest in the country’s agricultural sector.

There likely is also a ‘North Korea’ element to factor into a long-term U.S.-China trade agreement. After Trump walked away from a ‘deal’ with Pyongyang last week, he demonstrated resolve to the Chinese in that he’s not going to be willing to sign any agreement that doesn’t significantly benefit the United States simply to score political points with his domestic supporters.

The tariff war, as we have frequently reported, is hurting China’s economy. We always knew it would because the U.S. is China’s largest market. Plus, Xi wants to get this resolved because the longer it drags on, the harder his economy is hit and the more unrest it foments at home.

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1 Comment on Winning: Trump, Xi close to ‘trade deal’ as Chinese farmers warn government they’ll need subsidies to compete with U.S. farm products

  1. Joyce L Baird // March 6, 2019 at 10:00 am // Reply

    Isn’t China still buying us gmo junk? It must be failing as badly there as it is here. And they want me to pay for it? ( stealing tax money)

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