U.S., China trade

A U.S. flag flies next to the Chinese national emblem in Beijing. The nations on Friday announced a de-escalation of the trade war.

Over the last three years we’ve learned to be cautious with our optimism on matters of trade. But, it looks as though there was some positive movement on that front last week.

After more than a year of dithering the House of Representatives approved the U.S.-Mexico-Canada Agreement. USMCA replaces the North American Free Trade Agreement.

NAFTA has received mixed reviews from farmers since the first President Bush negotiated it and President Clinton signed it.

Making good on a campaign pledge, President Trump reopened talks on the North American Free Trade Agreement with Canada and Mexico. The product of those negotiations was the USMCA. Those terms were formally accepted Nov. 1, 2018, and the deal was put before Congress.

And there it has sat.

Although ag interests were happy with the new deal, Democrats in Congress said it didn’t go far enough to protect Mexican workers or the environment. Raising standards for Mexican workers makes U.S. manufacturing, particularly that staffed by union labor, more competitive.

House Democrats and the White House have been working behind the scenes to make the necessary tweaks to the pact. Despite the rancor over the House’s attempt to impeach Trump, or perhaps because of it, a deal was reached. Democrats representing districts in the industrial Midwest need a trade deal just as much as the president.

The deal still has to be passed by the Senate. Senate Majority Leader Mitch McConnell anticipates that the Senate will have to consider articles of impeachment pending in the House, and says a vote on the trade deal will come after the Senate trial.

Also last week the administration and Chinese officials announced a deal to de-escalate the 17-month trade war between the two countries.

The U.S. agreed to suspend a new round of tariff hikes on $160 billion worth of Chinese goods that were to go into effect last weekend and to reduce tariffs on $112 billion in goods that are already in place. China agreed to buy $40 billion worth of agricultural goods from the U.S. a year for the next two years.

The Chinese also agreed to reduce barriers to beef, poultry and animal feed, and to increase protections for intellectual property.

The president told farmers last week that they’d need to buy bigger tractors because they will be selling so much to China.

We suspect most farmers will hold their order until the ships start leaving the dock. The announcement was light on the operational details. China’s commitment to $40 billion in ag purchases is ambitious, given its purchases have never topped $26 billion a year.

As we said, we’ve learned to be cautious because we’ve seen these deals fall through or stall just as quickly as they are announced.

But in keeping with the yuletide season we are willing to believe possible a Christmas miracle or two — at least for now.

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