President Trump’s trade war with China has rattled investors, raised prices on a number of consumer goods, and uprooted entire markets for American farmers, but a new truce may be a sign of progress ahead.
Last week, The Wall Street Journal reported the Trump administration was shelving some new tariffs against Beijing while leaving room for ongoing demands to be met in the future. In exchange, the United States was assured of future agriculture purchases.
Any trade agreement had stalled out over the last several months with tensions growing between the two countries. But this initial step taken Friday sees the United States calling off planned tariffs this week while Beijing agrees to purchase between $40 and $50 billion worth of American agricultural products, according to the Journal.
President Trump said an overall deal will come in the future through three different stages, and some of the more divisive issues will be addressed at another time. One of the bigger issues remains the U.S. accusing China of forcing the transfer of American technology to its economic rival. Beijing has denied this, the Journal reported.
Still, despite the breathing room, financial services company Morgan Stanley warned the partial trade deal is an “uncertain” agreement at best, according to CNBC. The company also pointed out there doesn’t seem to be a viable path to reducing existing tariffs at the moment.
“There is not yet a viable path to existing tariffs declining, and tariff escalation remains a meaningful risk,” the bank said. “Thus, we do not yet expect a meaningful rebound in corporate behavior that would drive global growth expectations higher.”
Investment banking company Evercore noted the president’s claim that America is near the end of its trade war isn’t plausible, CNBC reported.
“We do not expect tariff cuts in 2020 – but are ready to be favorably surprised,” the company wrote in a note. “And as long as such punitive tariffs remain, we would describe US-China economic relations as bad, not good.”
Goldman Sachs said it sees a 60 percent chance that the announced 15 percent tariffs will take effect, but also noted it expects a delay until early 2020, as opposed to the current scheduled day, December 15, according to CNBC.
Farmers around the country, including in Arkansas, have been watching every development of the trade war closely, looking for signs of it winding down and stability returning to the markets.
In January, Arkansas Money and Politics reported the Arkansas Farm Bureau and others were paying close attention to each agreement or agitation that came along in this trade war.
Back then, Matt King, director of national affairs at the Arkansas Farm Bureau, agreed that farmers around the state were very concerned about the China trade war. With no permanent solution in place with the arrival of fall, that dread in the local farmers is unlikely to have shrunk.
King said 60-plus percent of Arkansas soybeans (one of the state’s biggest crops) go to China. That’s one out of every three rows of soybeans. The volatility in the market does nothing to aid those numbers and puts much up in the air.
When it comes down to it, Arkansas farmers are looking for stable markets and increasing soybean prices, according to King. Whether this latest truce leads to either of those things remains to be seen.
Just like it was back in January, the fate of this trade dispute remains in the hands of President Trump and President Xi Jinping.
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