Saturday, July 31, 2021

US Farmers to Benefit from US-China Trade War 90-Day Truce

Following the US-China Trade War 90-Day Truce on new trade tariffs, the United States expects Chinese tax on US farm goods would be removed quickly. Farm belt representatives are still cautious despite President Donald Trump’s assurance to the American farmers. As trade tensions escalated between the two countries, Beijing had slapped tariffs on US soybean imports and turned to Brazil.

Trump tweeted that “farmers will be a very BIG and FAST beneficiary of our deal with China.” The Chinese tariffs, imposed since July, have badly bruised some segments of agriculture such as soybeans. US soybean exports to China since September 1 have fallen to 339,000 tons from nearly 15 million tons.

China has promised to buy more US agricultural products and this could very much likely, send down prices for soybeans from Brazil and other sources around the world. Eurasian Times has earlier reported that Brazil is China’s major agriculture trading partner.

According to industry analysts, this would ramp up market uncertainty. Gustavo Oliveira, assistant professor of global studies at the University of California said instead of being a boon for the Brazilian farmers, the deal would be a total bane.

He said continued uncertainty in the US-China relationship and the trade war would cause headaches for farmers around the world. “Farmers are used to dealing with the uncertainty of the weather, and some uncertainty in international markets is expected, but 25 per cent up or down on the price of one of the world’s two largest producers is really dramatic uncertainty. And the possibility that this could be removed, exactly as Brazilian crops go on the market, that’s what’s frustrating for everyone.” As per Chinese customs data, China imported 6.92 million tonnes of soybeans in October, of which 6.53 million tonnes (94%) came from Brazil. This is almost double the 3.38 million tonnes imported from Brazil a year earlier.

Economist professor at Iowa State University, Chad Hart said everything right now is based on the good words of the two presidents (Trump and Xi). “The expectation is that there is an agreement for significant purchases on the agricultural side. But its unlikely to be done until the tariffs are reduced.”

He said there could be some contracts soon from the Chinese government buyers. But observers say that the two countries should tread cautiously.

More News at EurAsian Times

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