Market News & Headlines >> Trade Truce Boosts Commodities
The trade truce announced by the U.S. and China over the weekend provided a Monday boost for a number of agricultural commodities markets including soybeans, cotton and cattle, spurring hopes for increased U.S. exports.
The U.S. and China reached a consensus on “taking effective measures to substantially reduce” the U.S. trade deficit with China and both sides agreed on “meaningful increases” in U.S. agricultural and energy exports to China, according to a joint U.S.-China statement issued on Saturday regarding talks that took place in Washington between top U.S. officials including Treasury Secretary Steven Mnuchin; Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer with a Chinese delegation led by Vice Premier Liu He.
In exchange for China’s promise to buy more U.S. goods and services, the U.S. agreed to suspend its threat of import tariffs against $150 billion of Chinese goods. "We are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework," Mnuchin said in a television interview on "Fox News Sunday."
At present, there are no specifics regarding China’s pledge to cut its trade surplus with the United States. In the first round of trade talks with China earlier this month in Beijing, the U.S. had demanded that China reduce its trade surplus by $200 billion, but no dollar figure was mentioned in Saturday’s joint statement.
Mnuchin said the U.S. expected to see a big increase of between 35% and 40% in agricultural exports to China this year alone and a doubling of energy purchases over the next three to five years. "We have specific targets. I am not going to publicly disclose what they are. They go industry by industry," Mnuchin said.
President Trump touted the potential increase in U.S. agricultural exports on Twitter on Monday, saying, "China has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products - would be one of the best things to happen to our farmers in many years!"