The Trump administration announced the arrangement on Saturday [December 1], following a meeting between US President Donald Trump and China’s President Xi Jinping during the G20 summit in Argentina.
The initial agreement potentially sets a timeline for efforts to address trade issues between the two countries, according to a statement from the US White House.
Tariffs on US and Chinese products have been linked to ongoing trade uncertainties including the reductions in exports of some US feed ingredients including sorghum and soybeans.
The export forecast for fiscal year 2019 predicts reductions of $3bn stemming, in part, from the drop in exports of soybeans to China, reported the US Department of Agriculture on Thursday.
Members of the American Soybean Association (ASA) said they were “pleased” to hear about positive developments from the meeting.
“This is the first positive news we’ve seen after months of downturned prices and halted shipments,” said John Heisdorffer, ASA president said. “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 damage done to our trade relations with China, which has been essential to successful soybean exports for years,” he added.
In addition to challenges in feed ingredient exports, US feed producers have faced restricted access to the market and challenges with some imported ingredients, according to the American Feed Industry Association.
De-escalation discussion details
The agreement between the two leaders includes that the US will halt plans to increase the current 10% tariffs on about $200bn in products from China to 25% starting in January, according to the administration.
China has reportedly agreed to increase its purchases of agricultural and other products from the US, according to a statement from the White House. “China has agreed to start purchasing agricultural products from our farmers immediately,” it added.
Negotiations have been planned to start “immediately” regarding topics including forced technology transfer, non-tariff barriers, intellectual property protection, cyber intrusions, agriculture, cyber theft and services, the US administration said. A 90-day window has been set for the discussions.
“If at the end of this period of time, the parties are unable to reach an agreement, the 10% tariffs will be raised to 25%,” the Trump administration added.
The discussions were “positive and constructive” added the Chinese Ministry of Foreign Affairs in an unofficially translated statement. “The two sides proposed a series of constructive plans on how to properly resolve existing differences and problems.”
Both countries agreed to open up their markets and teams on both sides are set to “step in the direction of canceling all tariff increases, intensify consultations and reach a concrete agreement on mutual benefit and win-win,” the ministry said.
Industry weighs in
In recent years, China has been the largest market for several US feed crop including soybeans and sorghum, according to industry information.
There are hopes that the agreement will allow China to reopen its market to feed ingredients from the US, said the ASA.
“During the 90-day negotiating period, ASA hopes to see China reopen its market to significant US soybean imports as a key confidence-building step that will help restore our trade relationship,” said Heisdorffer. “This is an important opportunity to demonstrate positive momentum that will strengthen efforts on both sides to restore economic relations that are mutually beneficial.”