The dueling narratives from the White House and Beijing show just how far apart the two sides remain 18 months into a trade war that has brought the global economy to a perilous place and slowed the U.S. economy. Business leaders have halted investments because of the uncertainty.
As farmers await details of what exactly was agreed to, they are watching carefully to see what the final number will be because there is a vast difference between $50 billion a year, which would be a major expansion of sales to China, and $50 billion over two years, which would merely return the U.S.-China agricultural trade to roughly what it was before Trump launched his trade war.
China was routinely purchasing more than $20 billion worth of U.S. agricultural products a year before the trade war became heated last year, including a record $25.9 billion in purchases in 2012, according to U.S. Agriculture Department data. But sales to China tumbled to less than $10 billion last year and remain on track for a similar slump this year.
“We didn’t ask for this. We’ve been unfairly retaliated against. I think farmers just want to get back to business as usual,” said John Newton, chief economist at the American Farm Bureau Federation. He noted China has made a lot of commitments to buy soybeans in 2020 but those contracts can be canceled at any time.
Trump has long enjoyed high popularity in farm country, but his trade war has been especially harmful to American farmers, some of whom are starting to indicate they would not vote for him again if the trade war doesn’t end soon.
The White House has yet to release any details of the “phase one” deal on paper, but Trump is already heralding it as the best deal ever for American farmers. In the Oval Office on Friday, Trump told reporters China’s new agricultural purchases would be “two and a half, three times what China had purchased at its highest point thus far,” a statement that is not backed up by the data.
“The deal I just made with China is, by far, the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country. In fact, there is a question as to whether or not this much product can be produced? Our farmers will figure it out. Thank you China!” Trump tweeted Saturday.
As Trump and Chinese Vice Premier Liu He stood face to face in the Oval Office on Friday, a reporter asked whether the agreement was for $40 billion to $50 billion in purchases every year. Trump turned to Treasury Secretary Steven Mnuchin and asked him to “define that, please.”
“It will scale up to an annual figure. Yes,” said Mnuchin, who later added it would hit that higher level “within the second year."
A spokeswoman for the U.S. trade representative said Thursday that China had committed to $40 billion to $50 billion a year, “scaling up over two years,” implying purchases would be significantly higher by 2021.
Whether China picks up its agricultural purchases is likely to play a critical role in Trump’s popularity in states such as Iowa that depend heavily on soybean sales to China. Exports of soybeans to China were typically above $12 billion a year before the trade war, but that cratered to barely over $3 billion last year.
October is a key month for soybean harvests, and sales to China are typically heavy from October through January, according to the American Farm Bureau Federation, meaning the next few weeks will be telling about just how committed China is to increasing purchases.
Many farmers are debating what else China might buy from the United States. Sales of lumber, ethanol and fish to China have been rising in recent years and could help China meet a commitment to purchase more if those areas continue to increase.
China also is struggling to supply enough pork products to its citizens after many of the nation’s pigs were infected with an outbreak of African swine fever. But even in 2012, when China made record purchases of U.S. farm products, the Chinese bought only about $1 billion in pork and other meat products, raising questions about how high it could go.
“There should be higher demand from China for U.S. pork,” said Chad P. Bown, a senior fellow at the Peterson Institute for International Economics. “But I doubt China will all of a sudden import $14 billion a year of pork. All the lost soybean sales won’t be made up with more pork.”