As the United States/China trade war plods along between negotiations and making threats to hike tariffs, the spectre of what could happen down the proverbial road remains rather bleak.
First was U.S. President Donald Trump speculating that China may not want to make a deal with the U.S. until after the 2020 presidential election. For all of Trump’s hubris over the last few years, there could be something to that. From China’s point of view, it can keep dealing with the Trump administration or hold off to see if the Democrats win the election and begin negotiating with whoever emerges out of a field of 20 contenders for the party’s nomination.
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In the meantime there remains the issue of China buying more U.S. farm goods, let alone moving what it already has in the U.S. At last count, China still had about 4.25 million tonnes of old-crop soybeans waiting for shipment. Should those beans get moved, they’ll likely be rolled into the new crop.
Recently China made an additional small purchase of soybeans, but it was at best a tiny blip on the markets that was quickly forgotten. A substantial purchase of farm goods by China would help buy a lot of goodwill and could change the tone of the trade war.
And it’s a tone in need of change. In line with a string of tweets lambasting China, Trump has now accused it of attempting to devalue the U.S. dollar.
Of course, on the international stage, one simply doesn’t back down. With Trump’s threat to hike tariffs another 10 per cent on Sept. 1, China retorted by threatening to take “necessary countermeasures,” which could include restricting the sale of rare earth elements needed for much of today’s smartphone technology. China has approximately 80 to 85 per cent of the world’s supply of rare earths.
August most definitely began with a roar with Trump’s tariff threat. As the summer winds down it will be interesting to see how much more roaring — from both sides — there could be and if the month closes with optimism for a trade deal in September.
