Trump’s ‘Phase One’ Agricultural Deal With China Is Falling Apart
Low prices, competition, and inflammatory rhetoric have joined forces.
The Trump administration announced a partial trade deal with China in January, hoping to end a trade war that has hurt American farmers. But since then, news has generally indicated that China will not come anywhere near to buying the amount of American agricultural goods President Donald Trump said they would. Over the past few days, rhetoric over Hong Kong has made that even less likely.
The “Phase One” plan of the new trade deal, according to the Trump administration, would result in $36.5 billion worth of agricultural goods exported to China in the calendar year 2020, and $50 billion in each of the two years after that. Those figures were generally viewed by economists as optimistic, probably unrealistically so; that 2020 figure would have been $12.5 billion over even pre-trade-war numbers.
While there certainly was an increase in Chinese imports of American agricultural goods following that announcement, it has been nowhere near those promised levels—and remember that Trump told farmers to buy “more land” and “bigger tractors” to prepare for huge sales to China. In late February, the USDA’s chief economist predicted $14 billion in 2020 sales to China. And things have only gotten worse since then.
Late last week, new data from the USDA, reported by Bloomberg, shows that China purchased only $3.35 billion worth of American agricultural goods in the first quarter of 2020, which is supposed to be one of the biggest purchasing quarters for soybeans. That’s not only way behind the pace these purchases would need to be at to fulfill the “Phase One” goal; it’s the lowest first quarter in 13 years.
There are several causes for the lack of exports to China. One, of course, being that everything is screwed up thanks to COVID-19. But prices are also quite low compared with the past decade or so, and increased (very cheap) competition from Brazil has made exports harder.
But things only got worse from there. On Monday, Reuters reported that China asked state-owned firms to stop purchasing soybeans and pork from the United States; China is by far the US’s largest soybean importer, and its second-largest pork importer, after Mexico. China has also threatened to further halt purchases of American agricultural goods.
This time, it’s because Trump, on Friday, said that the United States would begin to strip the various special privileges that Hong Kong has. A 1992 act, which has been in place ever since, views Hong Kong as an autonomous region, with different regulations than the US-China relationship. Those include an extradition treaty, exemptions from tariffs, freer travel between countries, and more.
The Trump administration essentially said that China’s recent crackdowns on Hong Kong mean that the island is no longer separate enough from mainland to warrant these different international rules. In effect, it means that the US will impose the same draconian rules on Hong Kong as it does on the rest of China, including tariffs on Hong-Kong-made goods—which is a lot of goods. The US imported about $4.7 billion in Hong Kong goods in 2019, and exported over $30 billion.
China was never anywhere close to purchasing the amount of US agricultural goods that Trump said it would. And now, that looks even less likely, as China has taken steps not only to not fulfill that “Phase One” deal, but to actually put a halt to imports. This is, in addition to everything else, disastrous for American farmers, who we hope did not actually go out and buy more land or bigger tractors in preparation for Chinese exports.
Follow us
Republish!
Republish our articles for free, online or in print, under a Creative Commons license.
Republish this article
This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.
Want to republish a Modern Farmer story?
We are happy for Modern Farmer stories to be shared, and encourage you to republish our articles for your audience. When doing so, we ask that you follow these guidelines:
Please credit us and our writers
For the author byline, please use “Author Name, Modern Farmer.” At the top of our stories, if on the web, please include this text and link: “This story was originally published by Modern Farmer.”
Please make sure to include a link back to either our home page or the article URL.
At the bottom of the story, please include the following text:
“Modern Farmer is a nonprofit initiative dedicated to raising awareness and catalyzing action at the intersection of food, agriculture, and society. Read more at <link>Modern Farmer</link>.”
Use our widget
We’d like to be able to track our stories, so we ask that if you republish our content, you do so using our widget (located on the left hand side of the article). The HTML code has a built-in tracker that tells us the data and domain where the story was published, as well as view counts.
Check the image requirements
It’s your responsibility to confirm you're licensed to republish images in our articles. Some images, such as those from commercial providers, don't allow their images to be republished without permission or payment. Copyright terms are generally listed in the image caption and attribution. You are welcome to omit our images or substitute with your own. Charts and interactive graphics follow the same rules.
Don’t change too much. Or, ask us first.
Articles must be republished in their entirety. It’s okay to change references to time (“today” to “yesterday”) or location (“Iowa City, IA” to “here”). But please keep everything else the same.
If you feel strongly that a more material edit needs to be made, get in touch with us at [email protected]. We’re happy to discuss it with the original author, but we must have prior approval for changes before publication.
Special cases
-
Extracts. You may run the first few lines or paragraphs of the article and then say: “Read the full article at Modern Farmer” with a link back to the original article.
-
Quotes. You may quote authors provided you include a link back to the article URL.
-
Translations. These require writer approval. To inquire about translation of a Modern Farmer article, contact us at [email protected]
-
Signed consent / copyright release forms. These are not required, provided you are following these guidelines.
-
Print. Articles can be republished in print under these same rules, with the exception that you do not need to include the links.
Tag us
When sharing the story on social media, please tag us using the following: - Twitter (@ModFarm) - Facebook (@ModernFarmerMedia) - Instagram (@modfarm)
Use our content respectfully
Modern Farmer is a nonprofit and as such we share our content for free and in good faith in order to reach new audiences. Respectfully,
-
No selling ads against our stories. It’s okay to put our stories on pages with ads.
-
Don’t republish our material wholesale, or automatically; you need to select stories to be republished individually.
-
You have no rights to sell, license, syndicate, or otherwise represent yourself as the authorized owner of our material to any third parties. This means that you cannot actively publish or submit our work for syndication to third party platforms or apps like Apple News or Google News. We understand that publishers cannot fully control when certain third parties automatically summarize or crawl content from publishers’ own sites.
Keep in touch
We want to hear from you if you love Modern Farmer content, have a collaboration idea, or anything else to share. As a nonprofit outlet, we work in service of our community and are always open to comments, feedback, and ideas. Contact us at [email protected].Trump’s ‘Phase One’ Agricultural Deal With China Is Falling Apart
by Dan Nosowitz, Modern Farmer
June 4, 2020
Modern Farmer Weekly
Solutions Hub
Innovations, ideas and inspiration. Actionable solutions for a resilient food system.
ExploreExplore other topics
Share With Us
We want to hear from Modern Farmer readers who have thoughtful commentary, actionable solutions, or helpful ideas to share.
Submit
Trump told farmers to buy “more land” and “bigger tractors” to prepare for huge sales to China.
I’d love to think that farmers are too rational to believe something like that – particularly given his record of truth-telling and honest forecasts, whether you voted for him or not.