hero image

On Sunday, President Trump bragged that China had started purchasing large quantities of US farm products following a tariff deal last week. However, the president did not give any evidence as to how true his assertions were.

US and China reach an agreement for China to buy US agricultural products

The president announced part of the deal last week describing it as the first phase of the deal that could take up to five weeks to compile. He provided no details to support his claim that large purchases were being made by China weeks from the codification of the deal. The US was planning to increase tariffs to 30% on $250 billion of imports from China this week.

China will now increase its spending on US agricultural products, which is good news for farmers. The terms of the agreement indicate that Beijing will increase spending on US farm products to around $50 billion up from $40 billion in the next two years. According to government data, US farm exports to China in 2017 were around $19.5 billion.

China to import more soybeans from the US

Before the announcement of the deal, trade-sensitive products such as cotton, hogs, and soybeans saw their price jump. This is because investors were anticipating an increase in purchasing commitments from the Chinese. If the agreement holds, then it will be a significant relief for American farmers who have grappled with depressed prices since then start if the tariff war.

China is a huge market for pork, soybeans, and cotton. Chinese officials had pre-empted that they will be purchasing US soybeans exceeding 30 million tons. Before the tariff war, China used to buy between 30 million to 35 million tons of soybeans annually.

It is not only American farmers who have felt the heat of the tariff wars. China also has seen its exports decline since the tariff war ensued. On Monday, Beijing reported that its exports to the US had dripped 17.8% in September following a 16% decline in August when the tariffs started working.