President Donald Trump met with Chinese President Xi Jinping at the G20 Summit in Buenos Aires, Argentina on Saturday. Trump agreed that on January 1, 2019 he will leave the tariffs on $200 billion worth of product at the 10% rate and not raise it to 25% as he previously committed. China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between the two countries. China has agreed to start purchasing agricultural product immediately.
President Trump and President Xi agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture. Both China and the U.S. have placed a 90 day timeframe on completing a deal. Once that 90 days is up, the 10% tariffs will increase to 25% if no agreement has been reached.
In a release from White House Press Secretary Sarah Huckabee Sanders, Trump said, “This was an amazing and productive meeting with unlimited possibilities for both the United States and China. It is my great honor to be working with President Xi.”
John Heisdorffer, a soybean grower from Keota, Iowa, and American Soybean Association president said, “This is the first positive news we’ve seen after months of downturned prices and halted shipments. If this suspension of tariff increases leads to a longer-term agreement, it will be extremely positive for the soy industry. We want to begin repairing damage done to our trade relations with China, which has been essential to successful soybean exports for years.”
In a statement from Angela Hoffman, Executive Director for the group Farmers for Free Trade, she said, “Any signal, even if temporary, that this trade war may de-escalate is welcome news for farmers. While farmers are cautiously optimistic about this development, they are also keenly aware that they are still subject to the existing painful retaliatory tariffs and lost markets that have hurt their recently harvested crops and income.”
The African Swine Fever outbreak may be a driver in moving negotiations along. China, the world’s biggest pork producer and consumer, placed its largest order for U.S. pork since the trade war began. A Reuters article says the purchase seems to signal that China has serious concerns about supply shortages due to the disease outbreak. China has imposed a tariff of 62 percent on imports of American pork. For the week ending November 22nd, China bought more than 3,200 tons of pork to be shipped this year. USDA data shows that’s the biggest purchase of the season since February.
China also bought close to 4,000 tons of pork to be delivered in 2019. Brett Stuart, President of Global AgriTrends, says pork is abundant in China right now and prices are low. However, he adds “that doesn’t mean there will be plenty of pork in China next year.”