President Donald Trump said Sunday that China has begun purchasing U.S. agricultural products, just two days after the two countries reached a tentative pause in their trade war.
“China has already begun agricultural purchases from our great patriot farmers & ranchers!” the president tweeted.
The agreement announced late Friday saw few concessions from either side. Though it was not included in the official statement about the talks, U.S. Treasury Secretary Steven Mnuchin said China agreed to double its spending on American agricultural products, reaching $40 billion to $50 billion per year over the next two years. The U.S. agreed not to raise to 30% from 25% its tariffs on $250 billion in Chinese goods — a move that was originally set to take effect on Tuesday.
In 2017, the U.S. exported $19.5 billion in agricultural products to China, according to the American Farm Bureau. That number fell to $9.1 billion last year.
It is unclear what, and in what quantity, China has resumed purchasing.
Soybeans, one of the U.S.’s most lucrative exports, has been among the hardest hit during the trade war. The decrease in purchases of the product has crippled many American farmers and resulted in the Trump administration’s spending billions of dollars to compensate them.
Last year China bought its smallest amount of U.S. soybeans in over a decade.
China recognizes that the farm belt is among President Trump’s most important election constituencies, and has zeroed in on agricultural products during the trade war. Other products Beijing has targeted include pork, beef, vegetables and sorghum.
At last week’s trade talks, China agreed to exempt some American pork imports, state-run CCTV reported. Pork is by far China’s most consumed meat, but its domestic pork industry has been decimated by African swine fever, which has resulted in the culling of more than a million pigs, according to the Chinese agricultural ministry. The price of pork has risen 50% in China over the last year, its commerce ministry said. Dutch bank Rabobank estimates that by the end of 2019, China’s pork production could be cut in half.
Amid the epidemic, which has infected pigs in all of China’s provinces, Beijing has largely turned to Europe for its pork imports, while raising tariffs on U.S. pork twice since 2018.
Trump and Chinese President Xi Jinping are slated to meet next month at the Asia Pacific Economic Cooperation summit in Chile. That meeting comes just a month before the U.S. is put a 15% tariff on billions’ worth of Chinese goods that have not been targeted already. These include consumer goods such as smartphones and computers.
Postponement of the December tariff increase was not included in the recent trade talks. If that increase goes into effect, it would mean nearly all of China’s $550 billion in exports to the U.S. would face taxation.
Tanner Brown is a contributor to MarketWatch and Barron’s and producer of the Caixin-Sinica Business Brief podcast.