President Donald Trump signed a trade agreement with China Wednesday. The phase one deal, according to the Trump administration, is worth an extra $40-50 billion annually over the next two years in U.S. agricultural sales to China.
However, Senate Minority Leader Chuck Schumer earlier this week called the deal weak, suggesting Trump reached a watered-down agreement to claim a “win” during his reelection campaign. Further information suggests the figure may be $32 billion in increased ag purchases, not $40-50 billion.
Senator Chuck Grassley, a Republican from Iowa, attended the ceremony. Grassley welcomes the agreement but says, “Not only must China follow through with its commitments in this phase one deal, but also work toward a comprehensive agreement.”
President Trump says the agreement removes trade barriers for U.S. agricultural products, particularly for beef. Meanwhile, Agriculture Secretary Sonny Perdue says the agreement will benefit many different U.S. farm commodities.
The agreement should be implemented within 30 days, according to the Trump Administration.
President Donald Trump says he’ll sign the first phase of a trade deal with China at the White House on Jan. 15.
Trump says Tuesday on Twitter that he’ll then travel to Beijing at a later date for talks aimed at reaching agreement on outstanding sticking points in the U.S.-China trade relationship.
In the deal reached earlier in December, the U.S. agreed to reduce tariffs on China and China agreed to buy larger quantities of U.S. farm products, such as soybeans. Remaining sticking points would be worked out during a second round of trade talks.
When news broke about the Phase One trade deal between the U.S. and China, it made the soybean industry especially happy. A Bloomberg report says don’t forget about wheat, which could also be a big winner in the agreement.
Speculation is rising that China will work to fill its wheat-buying quota as part of the agreement. That will likely create new demand for wheat because China has failed to live up to its wheat-purchasing promises in the past. Soybean purchases are likely to be somewhat more limited because of the African Swine Fever outbreak across the country, which will lower typical demand levels.
If Chinese wheat purchases were to reach the quota mark of 9.6 million tons, that would represent a huge demand jump. In the six years prior to and up through 2017, buying has averaged less than 50 percent of that allotment. The timing could be good for U.S. farmers.
Tighter corn supplies in Brazil and wheat supplies in Russia, the world’s top wheat exporter, have made American grain more competitively priced in the world market. That’s already causing Chinese importers to begin to boost their purchase levels from the U.S.