President Trump’s announcement of a preliminary trade deal with China was music to the ears of Missouri farmers. After a year and a half of back-and-forth tariff increases, an end may be in sight.
Details about the deal remain scarce. Initial reports say the “Phase One Agreement” will focus on deescalating the tariff war on farmers. According to President Trump, China has agreed to buy between $40 and $50 billion in U.S. agricultural goods.
President Trump did not specify a timeframe in which this amount would be purchased. This key detail will make all the difference. In 2017, the year before the tariff battles began, U.S. farmers exported about $24 billion worth of agricultural goods to China. Current sales are approximately $8 billion per year.
If the purchases are spread out over many years, the agreement may not be as significant as it sounds. However, President Trump did allude to the $40-50 billion eventually becoming an annual sales figure. This would be a massive boon for American farmers were it to become reality.
Details on specific commodities are also scarce. Reportedly, China will agree to buy 30 million metric tons of soybeans. This would be welcome news if true. Soybean exports were the hardest hit in this trade war. Sales to China plummeted from 30 million metric tons per year to only 13 million metric tons in the 2018/19 marketing year that ended August 31.
Reports also stated that China would agree to buy an unspecified amount of U.S. pork. China is the world’s largest consumer of pork, but the 72-percent tariff it has imposed on U.S. pork has made sales very difficult.
Compared to the rest of the country, Missouri would disproportionately gain from this deal. Missouri ranks seventh in production of both soybeans and hogs.
Soybeans are the state’s largest crop, with about 5 million acres planted each year worth over $2 billion. Soybeans and soy products are the state’s largest agricultural export as well.
Missouri has an inventory of over 3.5 million head of hogs, generating almost $900 million in sales each year. Missouri’s pork exports are second only to soy. The state exports over $328 million in pork per year, according to the Missouri Department of Agriculture.
President Trump also said the deal would rein in Chinese abuses toward intellectual property. American biotechnology companies have suffered from Chinese theft of gene traits and processes. As the world leader in biotech innovation, Missouri will strongly benefit from these provisions.
This first phase is welcome news to suffering farmers, but the deal is still a long way from complete. China’s trade representatives are demanding an additional round of talks before signing the Phase One agreement. If the countries can agree to more talks, Trump and Chinese President Xi Jinping may sign Phase One at a summit in mid-November. Missouri farmers will keep a close eye on negotiations as they proceed, and hopefully we can put this ugly chapter in our rear-view mirror.