President Donald Trump said he has asked China to immediately remove all tariffs on US agriculture, citing progress in trade talks between the two nations.
In making the demand, Trump noted in a tweet on Friday that he refrained from increasing US tariffs on Chinese goods to 25% from 10% on March 1, as he said he would in the absence of progress toward an agreement. Faxes and phone calls to China’s ministries of commerce and foreign affairs, and the office in charge of trade talks, went unanswered yesterday outside office hours.
China imposed retaliatory tariffs on American agricultural products last year, though Trump did not indicate that his demand was limited to those penalties. Soybeans, as well as beef and chicken products were on the first batch of retaliatory tariffs on $34bn worth of imports imposed in July, and were subject to an extra 25% duty.
It’s unclear what effect Trump’s demand could have on ongoing talks, which the president signalled earlier this week were moving toward an agreement. American officials are preparing a final trade deal that Trump and China’s President Xi Jinping could sign within weeks, people familiar with the matter have said, even as a debate continues in Washington over whether to push the Beijing government for more concessions.
Trump, speaking to reporters in Hanoi on Thursday after a summit with North Korea’s Kim Jong-un, said: “Speaking of China we’re very well on our way to doing something special. But we’ll see.” “I am always prepared to walk,” he said. “I’m never afraid to walk from a deal, and I would do that with China, too, if it didn’t work out.” If China were to remove the tariffs, it would likely be a huge boon to US crop markets that have been caught in the trade war crossfire. Soybean and ethanol shipments have all languished amid the duties. China is a key destination for most of the world’s biggest agriculture markets.
Farmers and lawmakers have long decried the tariffs, and the US agriculture economy has suffered under the weight of falling crop prices.
China has already made some good-faith purchases of American soybeans after declaring a trade truce with the US in December. Last week, Agriculture Secretary Sonny Perdue said more soybean purchases were coming. Ending the tariffs would dovetail with a proposal by Beijing to buy an additional $30bn a year of American agricultural products including corn, soybeans and wheat as part of a possible agreement.
“The markets are a little tired of some of the ups and downs and the eight or 12-hour news cycle of tweets,” said Greg Grow, the director of agribusiness at Archer Financial Services in Chicago. “The market needs to see some confirmation of a deal getting done.
If this is a confirmation, and we start to see agreements that are signed, we’ll see a positive reaction for prices. But we need to see confirmation of the news,” Grow said in a telephone interview on Friday.
The preparations for a Trump-Xi summit come amid conflicting signals from the Trump administration over the prospect of a deal. Treasury Secretary Steven Mnuchin said on Thursday the two nations are working on a 150-page document that would turn into a “very detailed agreement,” though he cautioned that “we still have more work to do.”
Speaking shortly before Mnuchin, White House economic adviser Larry Kudlow said the countries are on the verge of an “historic” pact that would commit Beijing to cut subsidies on state-owned companies and disclose when its central bank intervenes in currency markets.
His optimism came just a day after Trump’s top trade negotiator struck a more cautious tone.
US Trade Representative Robert Lighthizer told lawmakers that more work needs to be done and said the administration won’t accept a deal that doesn’t include significant “structural” changes to China’s state-driven economy.
He also stressed the need for a enforcement mechanism, allowing the US to take unilateral action if China breaks the rules.
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