Is the phase one trade deal in jeopardy if China can’t make enough purchases during a pandemic? - SupChina
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Is the phase one trade deal in jeopardy if China can’t make enough purchases during a pandemic?

For the second time in a week, President Trump expressed a willingness to walk away from his phase one trade deal with China if purchase commitments are not met. This morning on Fox News, he said, per Bloomberg (porous paywall):

“Look, I’m having a very hard time with China,” Trump said in an interview on Fox & Friends. “I made a great trade deal months before this whole thing happened. And it was kicking in, you know, a month ago and starting to kick in and starting to produce and then this happens and it sort of overrides so much.”… “I’m very torn, I have not decided yet, if you want to know the truth.”

Earlier this week, Trump said, “Now they have to buy and, if they don’t buy, we will terminate the deal. Very simple.”

Based on the overall numbers, things are not looking good. Politico reports:

The deal requires China to increase purchases of U.S. goods and services by $200 billion above 2017 levels over the next two years. That includes $76.7 billion more in U.S. exports this year and $123.3 billion more in 2021.

However, Commerce Department trade data released this week, showed China’s purchases of U.S. goods running below 2017 levels by more than $7 billion in the first three months of this year.

However, China is upping its purchases of agricultural goods, in particular soybeans and pork.

  • “In the first three months this year, China’s soybean imports from the U.S. more than doubled from the same period last year to 7.8 million tons, customs data showed (link in Chinese),” according to Caixin (paywall).
  • China bought “40,200 metric tons of American [pork] last week, the Asian country’s largest order since October, U.S. Department of Agriculture data showed Thursday,” per Bloomberg (porous paywall).

If Trump wants to, he could end up declaring a win for “Great Patriot Farmers”, even if the deal as a whole only sees partial success because of global economic upheaval.

In the meantime, expect months of uncertainty and conflicting signals on the future of the deal. Even this week there were conflicting signals, as hours before Trump made his most recent comments, the US Trade Representative released a statement that read:

Both sides agreed that good progress is being made on creating the governmental infrastructures necessary to make the agreement a success. They also agreed that in spite of the current global health emergency, both countries fully expect to meet their obligations under the agreement in a timely manner.

Lucas Niewenhuis

Lucas Niewenhuis is an associate editor at SupChina who helps curate daily news and produce the company's newsletter, app, and website content. Previously, Lucas researched China-Africa relations at the Social Science Research Council and interned at the Council on Foreign Relations in New York. He has studied Chinese language and culture in Shanghai and Beijing, and is a graduate of the University of Michigan.

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