In between flaunting his ability to use the Department of Justice as a political tool, and acting as a transcriptionist for Fox News, Donald Trump has devoted a slice of his Twitter storms over the last week to defending his trade negotiations with China. He has also declared that previous administrations made no effort to negotiate, which isn’t true. And that China had never before sent trade negotiators to the US, which isn’t true. Also that he had not pre-agreed to China’s demand to drop sanctions against telecommunications company ZTE—which is so-not-true that Trump actually tweeted to brag about the concession. Trump moved on Monday to bolster his image by making enormous promises.
Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce.
— Donald J. Trump (@realDonaldTrump) May 21, 2018
China already signed a free trade deal with Australia, which is increasing Chinese demand for Australian beef and dairy, at a cost to US farmers. And China already increased its alignment with Brazil, which competes with US farmers for soybeans, while Brazil is adding additional acreage of soy specifically for export.
Soybeans are among the highest concerns, since China is the primary export market. A third of all soybeans are grown specifically for export, and more than half of those end up in China. Soybean prices had been edging upward due to lower production in exporters Argentina and South Africa. But Trump’s destabilization of world markets after he imposed steel and aluminum tariffs, sparking concerns about a potential trade war, dropped agricultural futures—and particularly soybeans—through the floor.
Now, if any of the information coming out from the negotiations are to believed, China is agreeing to buy more. And all it took was Donald Trump backing away from every threat he’d made. In essence, it appears that Trump disrupted the market with threats, backed away from those threats and is now ready to accept the applause … for letting things return to almost as good as they were before the world’s best negotiator became involved.
The negotiations started in fear—a fear nourished by the usual intemperate and capricious statements from Trump. With Trump and China daily raising the stakes, Midwest soybean farmers looked to be one of the first who would get hammered. Threats alone dropped the price for soybeans to a fraction of their highs. It was a fear not at all addressed when Trump stated that farmers were “great patriots” and vaguely promised that the government would “make it up to them” should the trade deal leave them hip-deep in unsold goods.
It wasn’t helped when Trump marched into the negotiation with “a list of crazy demands”—and immediately began to demonstrate that he was willing to cave on those requests.
President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!
— Donald J. Trump (@realDonaldTrump) May 13, 2018
American farmers: “We’ll make it up to you.”
Chinese workers: “Commerce Department has been instructed to get it done!”
One of these things seems a little more forceful than the other.
Trump has now announced that the trade war has been “put on hold” which is another way of saying that the United States is asking for mercy.
The statement said that, after several days of talks, the Chinese agreed to “substantially” reduce the United States’ $375 billion trade deficit with China and that the details would be worked out later. It was noticeably vague.
Notice China didn’t agree to a specific amount. On Friday, Trump’s top economic adviser, Larry Kudlow, was telling reporters that the Chinese had agreed to reduce the deficit by “at least” $200 billion. China quickly denied that, and, a day later, the official statement didn’t have a concrete number, a seeming victory for the Chinese.
Now Trump is throwing a blanket over the whole thing by just making sky-high promises that China will buy so much that farmers won’t be able to grow enough beans! Why not? After all, Trump already “saved” the coal industry as coal power continues to decline. And Trump already saved all those Carrier jobs even though he didn’t. And Trump already promised that manufacturing jobs are rushing back into America, even through they’re not.
Just add “saved soybean farmers” to the list of Trump’s paper accomplishments.
Meanwhile, China has already demonstrated who really has the power to bring North Korea to the table—and who has the power to destroy Trump’s big photo-op.
China must continue to be strong & tight on the Border of North Korea until a deal is made. The word is that recently the Border has become much more porous and more has been filtering in. I want this to happen, and North Korea to be VERY successful, but only after signing!
— Donald J. Trump (@realDonaldTrump) May 21, 2018
Trump is appealing to China to keep the screws down on North Korea until after he can take credit. Because that is what’s important. But he can always claim credit anyway—just ask farmers.