China is willing to buy more American farm goods if Trump rolls back some of his tariffs, but are they willing to buy more than they purchased even before Trump's trade war began?
The simple answer that immediately pops into your mind is probably "no," but Trump is still demanding as much according to the Wall Street Journal.
Beyond demanding that China buy more American farm goods than they actually have need for, the Journal reports that he's also asking China to forsake their obligations to other countries to facilitate "phase one" of his "greatest and biggest deal ever."
President Donald Trump is asking China to buy $40 billion to $50 billion of farm goods a year, which is significantly higher than the $8.6 billion the country bought last year, the Journal said, citing people familiar with the discussions. The administration is also demanding that China publicly announce its purchasing plans and say that they wouldn’t depend on market conditions or China’s trade obligations, sources told the Journal.
By demanding that China buy more farm goods than they have need for, Trump is more or less demanding that they subsidize American farmers by buying goods that will just rot in a port somewhere.
China only purchased $20 billion in American farm goods at the peak of trade before Trump imposed any tariffs so demanding that they buy more than twice that amount has always been audacious in a "are you shitting me?" kind of way.
Trump and his cabinet lackeys continue to engage in happy talk and say they're "close" to finally reaching a deal, but there's such a large gap between what Trump is asking for and what is practical that it's hard to believe they can be that close.
The difference between buying $8 billion or $20 billion or $50 billion in goods is huge. We're not talking about crossing the Ts and dotting the Is here. How do you 'inch closer' to securing a deal that does not make any practical or economic sense at all?
Trump deployed his top economic adviser Larry Kudlow to flap his lips to the press this morning and he said they're "closer" to a deal than they were in mid-November.
“The deal is close. It’s probably even closer than in mid-November,” Kudlow said. “The reality is constructive talks, almost daily talks. We are in fact close. ... There’s no arbitrary deadlines, but the fact remains Dec. 15 is a very important date with respect to a no-go or go on tariffs.”
We don't actually know how close (or not close) they were to a deal in November so this means effectively nothing. Kudlow also told CNBC that Trump will "walk away" if China doesn't agree to his terms.
We're nine days away from Trump's next round of tariffs on all remaining Chinese goods. Today's jobs report was far better than previously reported by ADP and my initial instinct is that Trump may feel it proves he can move ahead with more tariffs and suffer no consequences for it.
As always, virtually anything could happen with Trump.