Truce made on future tariffs as China and United States agree to return to the negotiating table.

Jacqui Fatka, Policy editor

July 2, 2019

4 Min Read
Trump Xi G20 June 2019.jpg
President Donald J. Trump joins Xi Jinping, President of the People’s Republic of China, at their bilateral meeting Saturday, June 29, 2019, at the G20 Japan Summit in Osaka, Japan.Official White House Photo by Shealah Craighead

Over the weekend, on the sidelines of the G20 meeting, President Donald Trump and China's President Xi Jinping called a truce on increasing tariffs on the remainder of Chinese exports to the U.S., but the previously instituted tariffs will continue. Trump again promised that China would begin purchasing “large amounts” U.S. agricultural products as part of the latest discussions.

However, beyond Trump's tweet, no official statement from either nation offered insight into China's ag purchase commitments, which analysts say isn’t a good sign. Earlier this year, when talks looked to be inching near a solution, the same promise was made.

Trump and Xi stood together to offer a brief statement, and Trump said he believes they can go on to do something monumental for both countries and even things up with respect to trade.

Trump said, “I actually think that we were very close, and then ... something happened where it slipped a little bit, and now we’re getting a little bit closer, but it would be historic if we could do a fair trade deal. We’re totally open to it, and I know you’re totally open to it. I know all of your representatives have been working very hard with my representatives and the representatives of the United States.”

Xi said he has been in close communication with Trump through phone calls and letters. He was prepared to exchange views on fundamental issues concerning the growth of China-U.S. relations “so as to set the direction for our relationship in the period to come and to advance the China-U.S. relationship based on coordination, cooperation and stability.”

In response to the talks, Senate Finance Committee chairman Chuck Grassley (R., Iowa) said he is glad China chose to return to the negotiating table.

“I urge President Trump to continue to stand strong against China’s many abuses. Americans have made sacrifices for this trade war, and we have to get a serious, enforceable deal with structural changes for this to be worth it in the end. Farmers I talk to in Iowa understand the need to hold China accountable. Americans are united on the need for China to end its unfair and mercantilist trade policies. I’m encouraged that we’re back at the table to resolve these issues,” Grassley said.

U.S. agricultural exports to China accounted for 5% of U.S. cash receipts in 2017. China represents one of the best opportunities for major U.S. export growth in the near-term and long-term future. However, over the last year, the ramifications of the ongoing trade dispute have continued to take a toll on U.S. farmers.

After Trump and Xi agreed to launch negotiations in Buenos Aires, Argentina, in December 2018, Trump postponed an increase in tariffs on Chinese imports for 90 days that was scheduled to go into effect on Jan. 1, 2019. The President extended the deadline again in March because the parties appeared to be making progress in their talks.

It does not appear that a solution with the world trading superpower is imminent. Iowa State University agricultural economist Chad Hart said negotiators are a “long, long way to having a formal agreement,” and any deal with China will be nothing like the North American trade agreement or the U.S. trade deal with South Korea.

“To me, the best thing to come would be an agreement to reverse tariffs currently being erected and build towards some kind of trade agreement somewhere down the line,” Hart said. “Even when working with countries we get along with famously [i.e., Canada and Mexico], it took 14 years. China is a vastly different country and mindset in how they approach things. You’re not going to strike a deal much quicker with a country with that different starting point.”

Hart explained, “Tariffs can be reversed on the course of a tweet. Trade agreements take years, if not decades, to build.”

About the Author(s)

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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