Reality Check: China Won’t Immediately Start Buying U.S. Ag Goods

December 3, 2018 02:42 PM

The cease-fire between the U.S. and China sent soybeans higher, with prices ending the day up double digits. Purdue University agricultural economist Wally Tyner said the meeting Saturday night was a step in the right direction.

“I think it's a meaningful process in the sense that it limits the escalation,” said Tyner.

That escalation would have manifested in a tariff on all $267 billion worth of Chinese imports of 25 percent, up from the current 10 percent. The threat is now on hold after President Donald Trump and his Chinese counterpart Xi Jinping agreed to a 90-day window to negotiate a permanent cease-fire to the trade war.

“In that sense it's good, but it doesn't do anything about the tariffs that are already in place, and that's the concern,” said Tyner.

The White House touted over the weekend and again on Monday that China will immediately start buying U.S. agricultural goods. However, agricultural economists like Tyner warn with tariffs still in place, that may not be a reality anytime soon.

“I don't think there's going to be a rush to buy U.S. products,” said Tyner. “On the other hand, it's pretty clear now that Brazil and Argentina cannot supply all of the Chinese needs. Saying that they're [China] going to start buying U.S. products may just be a recognition of the reality that they have to buy some product, but it's not going to be a large amount.”

Tyner said the U.S. is still going to see a reduction in total demand; the extent of that demand loss is still unknown. He said some other countries are coming to the market to buy U.S. soybeans, eating up some of the lost demand, but he said it’s not to the extent it would have been without the trade war with China.

With soybean exports struggling, time is running out in the typical export window to ship beans to China before the Brazilian crop comes online. Tyner said even if exports resume today, he’s doubtful the U.S. can export to the level it saw before tariffs were put into place.

“I don't think, in soybeans, we can make up the lost ground,” said Tyner. “Our estimate was that the total loss and demand for the U.S. would be about 29 percent. I think that's still a good number - it could go up or down – but what we need is a long-term settlement.”

Tyner said he is watching what happens in the next 90 days closely. That’s the timeline the Trump Administration has given for the two sides to work through issues. If something isn’t resolved in the next 90 days, additional tariffs could be put into place.

“We need, during this 90-day period, to negotiate a long-term settlement that deals with the major issues - theft of intellectual property rights and the like- and gets rid of the tariffs on both sides,” said Tyner. “That's what we can hope for the longer term.”

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Spell Check

PJ Jahn
Ptown, IL
12/4/2018 09:51 AM

  This headline pretty much confirms the fact that the Lying Conman, Traitor/Trader Trump got zilch, and was told what he could do with it, in the dinner meeting with Xi. If your going to start a trade war, and plan to win, or benefit from it, you need to first know what you are doing. You need to plan ahead, and know all of your costs. The Lying Conman, Traitor/Trader Trump does not!!! He only knows 3 things about deal making, and negotiations. These are failures, as in bankruptcies, broken contracts, and lying all the time about everything and anything!!! Thus, so far the only thing we've gotten from China, is Javanka's patent rights. Yeah well, how's that one work out for you??? In somewhere around 30 days, Brazilian beans will begin to be harvested, and readied for shipment to China. That's some pretty good leverage, for China, eh??? I now believe that Lying Conman, Traitor/Trader Trump, his scum bag family, and all their corrupt/criminal business activities, will go down as being hard to believe possible the size, and scope of criminal corruption. I do well remember John Brennan using the term/word "treason" 3 times, in the first 3 days following Lying Conman, Traitor/Trader Trump's inauguration towards him. I knew right then, that Brennan knew something, so as to do so. He was the head of CIA, and being in the intelligence sector for years, he knew what he was referring to. Lying Conman, Traitor/Trader Trump, and his family are nothing but, real criminal bad actors. They are as phony as they come, and have disgraced, desecrated our stature, and scared the United States of America so, so badly!!! This period of time, will come down to be a very, very, dark part of our history as a nation!!! And remember this, the "Scandalous Republican Party" owns every bit of it!!! There is absolutely no way they can possibly deny that!!!!!

Flyover, IA
12/3/2018 06:40 PM

  I HATE to say this but I think this is a good thing. Americans themselves have devalued our food significantly. I don't want trade deals made for devalued product. Get your act together and think about what you have. If you don't think it's good enough, do it better. I dare ya...

bad axe, MI
12/3/2018 10:29 PM

  History always repeats itself. This reminds me of the Carter grain embargo of the late 70's. Crop prices were suppose to rebound fast but it took a decade . Prices didn't move much when they announced the truce , bad sign.