It was a bit of déjà vu at the most recent G20 Summit. Following a ramp-up in trade threats, the U.S. and China met to talk trade, pleasantries were exchanged, announcements of agreements were made, and a friendly future was foretold. But will it be different this time?
The 14th Group of 20 (G20) economic summit was held over the weekend of June 28-29 in Osaka, Japan. While there, President Donald Trump met with Chinese President Xi Jinping to discuss trade relations.
In a series of press conferences held after the meeting, as well as via Twitter, Trump explained the three primary outcomes of the meeting; the U.S. will not impose additional tariffs, some restrictions on Chinese telecom giant Huawei will be lifted, and China will buy more agricultural goods.
“…I promised that, for at least the time being, we’re not going to be lifting tariffs on China,” Trump said in a press conference roughly four hours after the meeting began.
“And China is going to be buying a tremendous amount of food and agricultural product, and they’re going to start that very soon, almost immediately. We’re going to give them lists of things that we’d like them to buy. Our farmers are going to be a tremendous beneficiary.”
These claims may sound familiar, however.
Following similar meetings with Xi during the 2018 G20 Summit, Trump—via tweets—and the U.S. Press Secretary via an official statement, announced that additional tariffs would be postponed, and that China had agreed to “start purchasing agricultural product from our farmers immediately.”
While this was somewhat the case for red meat—both beef and pork exports saw increased volume to China in December of 2018, and year-to-date (through April, most recent data) beef trade to China for 2019 is up roughly 300,000 pounds.—it was not for soybeans.
According to USDA data, Chinese imports of U.S. soybeans were basically non-existent in the months leading up to the announcement and still haven’t returned to levels seen before the trade war.
Available U.S. export data does not include the impacts of China’s targeted tariffs on U.S. agricultural products. These tariffs—which cover beef and soybeans—were announced by Beijing on May 13 and took effect on June 1.
“The 25 percent retaliatory tariff imposed last July has all but halted shipments to China, which up until last year was the largest export destination for U.S. soybeans,” noted the American Soybean Association in a recent statement on the impacts of the trade war.
“In 2017, China purchased $14 billion worth of U.S. soybeans. Now, the tariff has caused immediate and severe damage to the price of U.S. soybeans, which fell from $10.89 to $8.68 per bushel last summer.”
As of print, the November soybean contract stood at $9.09.
“Our finances are suffering and stress from months of living with the consequences of tariffs is mounting. Soybean growers need China’s tariff removed now,” said Missouri soybean farmer Ronnie Russell during a recent hearing before the House Financial Services Committee Subcommittee on National Security, International Development and Monetary Policy.
“Long-term, what farmers and rural communities need is predictability and certainty, which only comes through maintaining and opening new markets where we can sell our products. While we are working hard to diversify and expand other market opportunities, the loss of the China market cannot be fully replaced.”
Treading the same ground?
It’s not just claims of China buying ag goods that sound familiar. The pattern of events between this G20 Summit meeting and last year’s are following a similar path. In both instances, Trump and Xi met during increasing tariff threats to hopefully get trade negotiations back on track. Both times have resulted in the leaders praising the meeting and calling it a success, though in their vastly different ways.
“We had a great meeting,” Trump told the press after the meeting, highlighting the strength of his personal friendship with Xi.
“I had a great meeting with President Xi of China yesterday, far better than expected,” he tweeted the day afterwards. “Importantly, we have opened up negotiations again with China as our relationship with them continued to be a very good one.”
Xi’s language before the meeting was far more reserved, highlighting the 40 years of official diplomacy between the U.S. and China. An English-language statement from the Chinese government stated that, “the world is happy to see that … Xi and U.S. President Donald Trump agreed that the two countries will restart trade talks.”
Similar statements of friendship and forward-looking optimism were made immediately following the G20 Summit in 2018. However, trade negotiations broke down between the U.S. and China a few months later, early this May, when Chinese negotiators delivered a draft trade agreement with numerous edits and reversals on key issues. This breakdown was followed by Trump threatening additional tariffs against China of 25 percent on $350 billion worth of Chinese goods. China’s targeted ag tariffs followed that threat.
Several members of the press questioned the president on this potentially repeating pattern during several press conferences held at the G20 Summit this year. One asked him specifically if he was concerned China might reverse course on trade talks at the last minute as in 2018.
“That could happen,” Trump acknowledged, claiming that China would like to make a deal. In a later tweet, he clarified that:
“The quality of the transaction is far more important to me than speed. I am in no hurry, but things look very good.”
What to do with Huawei?
While not related to agriculture, the market matter of the U.S. treatment of Huawei was of keen interest following the Trump-Xi meeting. In answer to repeated questions from Chinese reporters, Trump explained:
“U.S. companies can sell their equipment to Huawei. I’m talking about equipment where there is no great national emergency problem with it.”
He declined to answer direct questions about removing Huawei from the Bureau of Industry and Security’s “Entity List,” calling such comments inappropriate. Companies and individuals on the list are subject to greater scrutiny and licensing requirements to outright bans related to trade. As of print, Huawei was still on the Entity List.
However, Trump did say he thinks the U.S. and China are going to be strategic partners.
“I think we can help each other. I think, in the end, we can — if the right deal is structured, we can be great for each other.” — WLJ