china trade war
February 21, 2020

The good news for American farmers is that China will buy almost $4 billion more in U.S. agricultural goods this fiscal year versus 2019, according to projections Thursday from Robert Johansson, chief economist at the U.S. Department of Agriculture. The less-good news is that China pledged to buy about $40 billion in U.S. agricultural exports this year, and Johansson forecast that China will purchase about $14 billion. Those numbers aren't exactly comparable — Johansson's projection was for fiscal 2020, which ends Sept. 30.

These new figures, the first released by the USDA since the U.S. and China de-escalated President Trump's trade war by signing a "Phase One" agreement in January, mean "it's either going to be a boom fourth quarter for U.S. farmers, or that extra $12.5 billion in American agriculture purchases promised by China for this year isn't happening," Bloomberg reports. Also, the $14 billion figure doesn't include seafood and ethanol, both included in the Phase One deal.

Agriculture Secretary Sonny Perdue predicted Thursday that China would surpass the $14 billion estimate. Johansson said the X-factors include how long the COVIC-19 coronavirus debilitates China, Brazil's record crop harvest, and how much pork China needs after African swine fever decimated its herds. Outside analysts are skeptical. "There's still a lot of uncertainty out there in terms of 'will the Chinese comply?'" AgResource president Dan Basse told Bloomberg Thursday. If China ends up buying just $4 billion more from U.S. farmers, the U.S. "may have to act in terms of putting additional tariffs back on the Chinese and reinvigorating the trade war."

"Before the Sino-U.S. trade war, China was the largest customer for U.S. ag exports with purchases of around $21 billion a year," notes Successful Farming. After Trump threw up tariffs and China retaliated by cutting back agricultural imports, farmers were hit hard, even with Trump's two huge bailouts. Trump touted the Phase One deal in December, telling farmers to buy "more land" and "bigger tractors" to prepare for a Chinese bonanza. Peter Weber

January 21, 2020

Despite Washington and Beijing having agreed to an initial framework, it might not be time to breathe a sigh of relief when it comes to the U.S.-China trade war, says the Peterson Institute for International Economics' Chad Brown.

In fact, Brown says the so-called phase one "may be doomed from the start" thanks to "unrealistic" export targets. Brown finds it highly unlikely China will be able to purchase the additional $200 billion (and then some) worth of U.S. exports by 2021, even when working with generous projections.

If China does fall short of expectations, that could spell trouble for international trade. It could imperil other aspects of the agreement and re-ignite trade tensions by way of U.S. retaliation. But it wouldn't only harm the two superpowers. Brown suggests China could try to hit its U.S. numbers by diverting imports from other trade partners, which could potentially make other deals more challenging.

Other factors could also hamper China's ability to meet the Trump administration's goals, including the U.S. restricting exports on tech products on national security grounds, fallout from previous tariffs, and even the outbreak of African swine fever on China's pig stock, which has reduced the country's demand for key American products like soybeans.

All told, Brown hints that a lot could still go wrong. Read more at the Peterson Institute for International Economics. Tim O'Donnell

January 11, 2020

Within the "Phase 1" trade deal between the U.S. and China expected to be signed on Jan. 15 is a sub-agreement that would revive a format of semi-annual discussions between the two powers similar to those utilized by the Bush and Obama administrations, The Wall Street Journal reports.

The discussions, which will be led by Treasury Secretary Steven Mnuchin and likely Chinese Vice Premier Liu He, are different from the next phase of the trade deal. They'll be more general in scope and reportedly a way for officials at all levels in both countries to bridge the gap and strengthen their relationships.

President Trump shut down similar plans earlier in his Oval Office tenure. But despite some tough rhetoric throughout the trade war, it looks like another sign (along with the first phase) that his administration is getting back in the negotiating mindset for the long haul. Indeed, the Journal notes the framework of the new agreement is similar in concept to the Strategic Economic Dialogue started by the George W. Bush administration, which was then broadened under the Obama administration. The Trump administration used to show little interest in continuing the legacy, but the revival appears to be right around the corner now.

Trump's former adviser Stephen Bannon wasn't pleased a dialogue-heavy initiative is coming back, arguing it's mere "window dressing," but Myron Brilliant, the U.S. Chamber of Commerce's vice president, told the Journal a "structured process" is necessary for addressing "serious issues with China." Read more at The Wall Street Journal. Tim O'Donnell

November 5, 2019

A joint law enforcement investigation between the United States and China may help inch the two countries closer to a long-anticipated trade deal, Bloomberg reports.

The investigation reportedly revolves around fentanyl smuggling, and China's National Narcotics Control Commission is expected to hold a press conference Thursday about the case, in which officers from both countries will reportedly give a briefing on their cooperation. Fentanyl is a highly addictive painkiller that has played a central role in the opioid crisis, leading to thousands of deaths in the U.S.

Washington has criticized Beijing in the past for not doing enough to stop nefarious opioid smuggling practices, and President Trump has specifically called out Chinese President Xi Jinping for failing to live up to a promise to crack down on the practice. But the recent cooperation on the smuggling front may help swing the negotiation pendulum back in the right direction. Bloomberg notes the concession from China, could help Trump sell his negotiation tactics to struggling farms, the U.S. business community, and trade hardliners within his own administration. Read more at Bloomberg. Tim O'Donnell

October 8, 2019

On Monday, the U.S. and China resumed high-level trade talks in Washington after a two-month hiatus and the U.S. blacklisted 28 Chinese organizations, barring them from buying goods from U.S. companies without government permission. The addition of the 28 local government agencies and tech companies to the Commerce Department's Entity List, combined with skeptical comments from China and President Trump, dimmed the prospects for a breakthrough in the U.S-China trade war, Reuters reports.

The Commerce Department said the 28 blacklisted agencies and companies "have been implicated in human rights violations and abuses in the implementation of China's campaign of repression, mass arbitrary detention, and high-technology surveillance against Uighurs, Kazakhs, and other members of Muslim minority groups." China has detained an estimated 1 million Uighurs in Xinjiang province and placed them in prison-like "vocational training centers."

The blacklisted government agencies are in Xinjiang and the tech companies include Hikvision, one of the world's largest surveillance equipment manufacturers, and other surveillance and facial-recognition software firms.

The trade negotiations kicked off Monday, but Vice Premier Liu He will meet with Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer starting Thursday for high-level negotiations. Tariffs on Chinese imports are scheduled rise again next week. Trump said Monday that "there's a chance we could do something very substantial," but he would "much prefer a big deal." Peter Weber

August 26, 2019

President Trump said Monday that unidentified Chinese officials had indicated overnight they want to resume trade talks. "China called last night our top trade people and said, 'Let's get back to the table', so we'll be getting back to the table, and I think they want to do something," Trump told reporters on the sidelines of the Group of Seven summit in Biarritz, France. He said his trade team fielded two "very good calls" from China, adding, "This is the first time I've seen them where they really want to make a deal. And I think that's a very positive step." Trump wouldn't say if he's been in direct contact with Chinese President Xi Jinping, though he called Xi "a great leader."

China's lead U.S. trade negotiator did say earlier Monday that Beijing is willing to resolve the trade war through "calm negotiation." Before Trump's comments, stock indices around the world were sharply lower on uncertainty about the U.S.-China trade war and what Trump might say. Peter Weber

August 17, 2019

Delays, delays, delays.

The U.S. Commerce Department is expected to grant Huawei a 90-day extension that permits the Chinese technology firm to buy supplies from U.S. companies, two sources familiar with the situation told Reuters. The reason behind the extension is so that Huawei can service existing customers. The agreement, which was set to lapse on Aug. 19, will allow Huawei to maintain existing telecommunications networks and provide software updates to Huawei handsets.

The U.S. blacklisted Huawei earlier this year, alleging the company could potentially harm U.S. national security and foreign policy interests. Reuters reports that the decision to grant Huawei the temporary reprieve could change by Monday. President Trump and Chinese President Xi Jinping are expected to discuss the firm in a call this weekend.

It's the second significant delay this week amid the ongoing trade war between Beijing and Washington. On Tuesday, the Office of the U.S. Trade Representative announced certain products would not be subject to a 10 percent tariff on Chinese imports to the U.S. until after the holiday season. Huawei throws another wrinkle into the U.S.'s plan, as analysts question what the concessions might mean for potential future negotiations.

Read more at Reuters. Tim O'Donnell

August 5, 2019

China's central bank, the People's Bank of China, allowed the yuan to breach the psychologically important rate of 7 to the U.S. dollar on Monday, pushing the Chinese currency to its weakest level in a decade, The New York Times reports. The People's Bank of China, which tightly controls the value of the yuan (or renminbi), cited "unilateralism and trade protectionism measures and the imposition of increased tariffs on China," but said currencies fluctuate and the renminbi is stable.

Worries about the ongoing U.S.-China trade war sent U.S. stock futures plunging early Monday morning. Futures for the Dow Jones Industrial Average dropped more than 300 points, or 1.2 percent, MarketWatch reports. Futures for the Nasdaq and S&P 500 were down 1.7 percent and 1.3 percent, respectively. Last week, President Trump surprised Wall Street by announcing additional 10 percent tariffs on $300 billion of Chinese goods, set to take effect in September.

China's currency news is "fueling concern Beijing might use its currency as a weapon in the tariff war," Fox Business reports. Peter Weber

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