China has a lot more to lose than the U.S. from a trade war, Commerce Secretary Wilbur Ross said Monday, ahead of the visit of Chinese Vice Premier Liu He this week to Washington for trade talks.
The Chinese envoy is expected to arrive today.
Ross, speaking at a National Press Club luncheon, said he remains hopeful that the U.S. and China “can make a fair deal,” but also stressed that if they fail, “a trade tit-for-tat will not be economically life threatening to the United States.”
China has already hit U.S. pork, tree nuts, oranges, lemons, plums and other ag commodities with tariffs and the country is threatening soybeans and corn with additional tariffs.
Michelle Erickson-Jones, a Montana farmer who will testify today at a hearing on the U.S. plan to hit China with tariffs on $50 billion worth of imports, said that Chinese retaliation is already harming U.S. farmers. As part of its threatened retaliation, China said it would put a 25 percent tariff on U.S. soybeans and that’s already driving some Chinese buyers away from the U.S.
“The soy industry is close to that breaking point as sales of soybeans to China have fallen from about 255,000 metric tons in the first week of April, when the trade dispute began, to just 7,900 in the last week of April,” she said. “Cancellations have also jumped, to more than 140,000 metric tons in the week ending April 26; in the same week last year, there were no canceled sales at all.”
But Ross played down the effects of Chinese retaliation on farmers, stressing that China could not completely replace U.S. soybeans with imports from Brazil.
“It is true that China is our largest customer, he said. “But it also is true that Brazil accounts for a bit more than 50 percent of Chinese imports, while we are 30 percent. For Brazil to replace us, they would have to increase their exports to China by 60 percent.”
Reports boost soybean, pork prices
Meanwhile, reports that China will back away from its threats to slap tariffs on U.S. farm goods helped bolster pork and soybean futures on Monday.
According to the Wall Street Journal, China might remove its threatened agricultural tariffs in exchange for the U.S. removing sanctions imposed on Chinese phone company ZTE for selling equipment to Iran.
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