The outlook for the China trade deal under President Biden
The China trade deal secured under President Donald Trump has been a boom to farm commodities in recent months. The big question is, what will happen to the rest of Phase One, and Phase Two moving forward.
The Biden transition team was already assessing the Trump administration’s trade deal with China before Inauguration Day. Even though the administrations disagrees ideologically on tariffs, President Biden has not given any indication he will cancel Phase One.
According to Dave Salmonsen, Farm Bureau’s Trade Advisor, “A lot of desire to move away from the tariffs that were put on China, and the answer has been, they’ll evaluate all of that. They’ll evaluate the Phase One agreement going forward... So, there’s a lot of talk, things will stay pretty much the same with China, maybe different tactics.”
He says that the deal obtained with tariff pressure has helped U.S. agriculture, after years of low commodity prices and now the pandemic. That is also despite tensions with China on other fronts.
“We’ve seen, especially this fall, the sharply increased sales for a variety of products to China, and the effect on prices that farmers receive,” he adds. “We want to see the Phase One commitments for purchases that run through 2021, we want to see those completed.”
The latest data shows in 2020, China failed to reach the target for U.S. imports. Food and ag imports totaled $23 billion dollars, about two-thirds of the goal.
USDA has already released predictions on trade with China for 2021.
It forecasts $27 billion dollars in ag exports, $4 billion more than last year. That is mainly due to greater demand for soybeans and corn.
Some economists say that if it ends up being in the high 20s that would be a good year. The target for 2021 for all U.S. goods is $43.5 billion dollars.