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WASHINGTON โ President Donald Trump heralded a breakthrough in U.S.-China trade talks, and markets rallied in relief over a de-escalation in tensions between the worldโs two biggest economies.
Yes, Trump agreed to suspend a tariff hike scheduled for Tuesday on $250 billion worth of Chinese imports. And the president said the Chinese agreed to buy $40 billion to $50 billion in U.S. farm products.
But nothingโs on paper and details are scarce. Chinaโs state-run media hasnโt even mentioned the promise to buy all those soybeans and other agricultural products.
And the negotiators have delayed dealing with the toughest issues for future talks. Meanwhile, the U.S. is still scheduled to target another $160 billion in Chinese goods Dec. 15, a move that would extend Trumpโs tariffs to virtually everything China ships to the United States.
Fridayโs announcement was โa nothing-burger,โ said Scott Kennedy, who analyzes Chinaโs economy at the Center for Strategic and International Studies. โI call it the โInvisible Deal.โโฆ The only thing that happened Friday was that the U.S. delayed the tariff increase.โ
The Trump administration acknowledges that work remains to be done on what it calls โphase oneโ of ongoing talks with China.
โWe made substantial progress last week in the negotiations,โ Treasury Secretary Steven Mnuchin said Monday on CNBC. โWe have a fundamental agreement. It is subject to documentation, and thereโs a lot of work to be done on that front.โ
U.S. Farm Sales to China Have Never Exceeded $26 Billion a Year
Mnuchin said he expected that he and U.S. Trade Representative Robert Lighthizer will meet with Chinaโs lead negotiator, Vice Premier Liu He, before a November Asia-Pacific summit in Chile. At that gathering, Trump and Chinese President Xi Jinping could officially sign off on a phase one agreement.
โItโs curious that Washington and Beijing have not yet put this โdealโ in writing,โ said Wendy Cutler, a former U.S. trade negotiator now at the Asia Society Policy Institute. โThat suggests that the details may not be worked out yet. If thatโs the case, we should expect more bumps in the road in the lead up to a mid-November meeting between Trump and Xi.โ
Trump emphasized the agricultural purchases he says China has agreed to. If China ultimately buys $40 billion to $50 billion a year, as Mnuchin said, it would mark a significant win for American farmers, who have been hit hard by the presidentโs trade wars.
U.S. farm sales to China have never exceeded $26 billion a year, according to the U.S. Department of Agriculture.
China already is a major food importer as rising incomes boost its appetite for meat, vegetables and higher-quality grains. The communist government has tried to promote self-sufficiency in rice, wheat, dairy and some other commodities. But with a population of 1.4 billion, it cannot meet all its own needs.
Jeff Moon, a former U.S. diplomat and trade official specializing in China who is now president of the China Moon Strategies consultancy, noted that Trump had reason to delay Tuesdayโs planned tariff increase. Trade hostilities are weighing on the U.S. and world economies. Tariffs have pushed up costs for U.S. manufacturers and created uncertainty about when and how the trade wars will end.
The Two Countries Are Deadlocked Primarily Over U.S. Allegations That China Deploys Predatory Tactics
โThe bottom line is that both sides (on Friday) gave themselves permission to do what they wanted to do,โ Moon said. โChina really needs the food, and Trump doesnโt want to impose the (increase in) tariffs. Thatโs the bottom line.โ
The two countries are deadlocked primarily over U.S. allegations that China deploys predatory tactics โ including outright theft โ in a sharp-elbowed drive to become the global leader in robotics, self-driving cars and other advanced technology.
Beijing has been reluctant to make the kind of substantive policy reforms that would satisfy the Trump administration. Doing so would likely require scaling back Chinaโs aspirations for technological supremacy, which it sees as crucial to its prosperity. โI donโt think China is willing to fundamentally change its system,โ Dollar said.
Resolving those issues is largely being pushed to future talks.
Over the past 15 months, the two countries have imposed tariffs on hundreds of billions of dollarsโ worth of each otherโs goods. Beijing has targeted farm products in a shot at Trump supporters in rural America.
Itโs taken a toll.
โWeโve Heard This Beforeโ
Tim Garrett, 63, shares a 5,000-acre farm with his brother in eastern North Dakota, where they grow mostly soybeans and corn. He voted for Trump and said he supports a better trade deal with China. But heโs โnot sure itโs coming about.โ
โIโm not a huge political guy to start with, but China has been ripping us off for years,โ Garrett said. โI believe something had to be done. I donโt think it should all be on the backs of agriculture.โ
Bob Metz, a fifth-generation farmer from Peever, South Dakota, and a past president of the American Soybean Association, said heโs hopeful for a deal but until that time โthe American farmer is getting hurt.โ
โWeโve heard this before,โ Metz said. โI donโt think anything has really changed with China, has it?โ
The few times China has agreed to buy soybeans, they are getting them at up to $2 a bushel cheaper than when the trade war started, Metz said.
โSo whoโs the winner here?โ he said. โIt seems that China buys a few beans going into the talks, but is the goal to get rid of them or is the goal to sell them at a good price? The Chinese have done very well on this.โ
U.S. Sen. Chuck Grassley, Republican of Iowa, a state hard hit by loss of soybean and pork sales to China, said he welcomes news that progress may have been made in some areas of the trade dispute with China but he said a final deal must address the full scope of structural issues and include strong enforcement mechanisms.
โAfter so much has been sacrificed, Americans will settle for nothing less than a full, enforceable and fair deal with China,โ Grassley said.
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