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Is the G20 deal a beginning to the end?

Source: Wikimedia Commons

On Saturday night the word came out of Buenos Aires, Argentina. The long-awaited meeting between President Trump and Chinese President Xi was held. China and the United States have been locked in a trade war for about six months. Agriculture producers have really felt the brunt of the imposed tariffs. Agriculture is one of the top U.S. exports to China. Whether you raised soybeans, tree nuts, or pork, you were the “tip of the spear.” Prices in these commodities have dropped due to the hit in the export market to China.

Audio: Agribusiness Matters 

What has seemed to surprise many is farmers and producers support the measures taken by the Trump administration, regardless of the effects had on the commodity prices. Many farmers have said they were looking to the other side of this situation. They are looking for the United States to have a better trade situation with China. China has been accused of stealing technological property. One case in point was a Chinese national trying to steal traited seeds and smuggle them out of the country. There has also been the matter of forced technology transfers, the practice of making a foreign company divulge trade secrets to China if they want to do business there.

All of this aside, farmers have still been taking the brunt of the situation. The tip of the spear just kept getting pushed deeper as the trade war escalated. The fact is depressed prices affected more than just a farmer’s bottom line. It also impedes the chances of getting operating loans, the ability to market some commodities, and more.

Farmers needed to see a glimmer of hope, and Saturday they got one.

A 90-day deal has been reached between the United States and China. President Trump has agreed to forego the planned increase to the tariff on Chinese goods set for January 1st. Chinese President Xi has agreed to start importing more agricultural, energy, and industrial goods from the United States. There was no word on whether there would be an easing of Chinese tariffs for those goods or not. Also, there were no specifics given on how much would be purchased. Both sides have promised to start a negotiation.

John Heisdorffer, a soybean grower from Keota, Iowa, and ASA president said, “This is the first positive news we’ve seen after months of downturned prices and halted shipments. If this suspension of tariff increases leads to a longer-term agreement, it will be extremely positive for the soy industry. We want to begin repairing the damage done to our trade relations with China, which has been essential to successful soybean exports for years.”

It seems the two sides have decided to start talking with each other rather than shouting at each other. This is something the whole U.S. economy in general, and Ag in particular, is going to be watching with hopeful hearts and minds.