The Trump regime claimed that China would import up to $50 billion in American farm goods each year if they sign a partial trade agreement or truce, but that never made much sense and seemed physically impossible given China only imported $20 billion in American farm goods under ideal conditions before Trump's trade war began.
Sure enough, Bloomberg reports that China is only floating the possibility of purchasing $20 billion in 2020; the same amount they purchased in 2017 before the trade war.
China aims to buy at least $20 billion of agricultural products in a year if it signs a partial trade deal with the U.S., and would consider boosting purchases further in future rounds of talks, people familiar with the matter said.
That amount would take China’s imports of U.S. farm goods back to around 2017 levels, before President Donald Trump began a tit-for-tat tariff feud with Beijing. In the second year of a potential final deal when all punitive tariffs are removed, purchases could rise to $40 billion to $50 billion, said the people, who asked not to be named because talks are private.
The market reaction to China’s pledge was relatively muted, with Chicago soybean futures climbing less than 0.5% but staying below highs from earlier this week. Corn, wheat and hog futures were either little changed or down.
In short, China is willing to purchase as much as they did before the trade war if Trump doesn't impose more tariffs, but he will have to remove all of his tariffs for purchases to increase beyond that.
I think we can see what China is doing here and I have to say it's clever enough to work; at least on Trump.
It appears to me that they're trying to slowly whittle Trump down to accepting the status quo as it existed prior to his trade war. They're not willing and possibly not capable of making the big, sweeping structural reforms that the White House has demanded, but they may not need to. It's possible they can just slowly buy Trump off.
The pledge to buy up to $20 billion in goods or anything beyond that is still based on demand and market conditions so there's no guarantee China will even meet the $20 billion figure.
It's anyone's guess what Trump will do next month, but I'm beginning to suspect he'll accept a deal to lock in his trade war as it is and declare victory. Tariffs on about $400 billion in Chinese goods will semi-permanently remain in place and our economy will suffer for it. And China will not have made any big changes to their economy, but at least he'll have something to show farmers back in Iowa next year.