China’s “Phase One” trade commitments expire soon, then what?
An ag economist says while China’s purchases of US ag goods are back to pre-trade war levels, the big question is what will happen when their purchase agreements under the Phase One trade deal expire at the end of the year?
David Widmar with Ag Economic Insights says he’s seen very little talk about this topic and the possibility of tariffs returning in 2022.
“Phase One was always a bridge to somewhere else and we haven’t figured out where that bridge is going to. There is a new administration and it’s not really clear how that is going to play out. Keeping in mind that most of these tariffs on both sides weren’t taken off the books, they were just temporarily suspended.”
Widmar tells Brownfield in the last nine months the US has set an all-time record for ag exports to China, lead by corn and soybeans.
“Year to date in 2021 China has purchased about $3.3 billion in corn and $3.6 billion in soybeans, so these corn purchases that got started last fall have been a big part of this uptick.”
And Widmar expects purchases will continue since historically, more than half of annual soybean purchases are made October through December.
He says the uncertainty lies in the unsolved trade relationship between the US and China come January, which farmers should be inquiring about.