Trump says will use China tariff funds to buy US agricultural goods
US President Donald Trump said Friday that he will use funds raised from taxing imports of Chinese goods to buy US farm products and distribute them to developing countries in a move that throws doubt on whether China will fulfil a pledge to buy 20 million mt of US soybeans.
Speaking on Twitter, President Trump said the process of placing additional tariffs of 25% on the remaining $325 billion worth of Chinese imports had started on Friday.
“With the over $100 billion in tariffs that we take in, we will buy agricultural products from our great farmers in larger amounts than China ever did and ship it (sic) to poor and starving countries in the form of humanitarian assistance,” Trump tweeted.
“In the meantime, we will continue to negotiate with China in the hopes (sic) that they do not again try to redo deal. Our farmers will do better, faster (sic) and starving nations can now be helped,” he said.
Chinese trade negotiators are due to meet US officials in Washington DC Friday to discuss how to overcome a year-long trade war that has seen the price of soybeans and corn slump 20%.
However, analysts do not expect a resolution any time soon after US trade negotiators stunned markets by accusing China of backtracking on a deal that was meant to be unveiled Friday – throwing into doubt whether China will fulfil its goodwill pledge to buy 20 million mt of US soybeans this year.
China state-owned industries have bought around 12.5 million mt of soybeans at levels above Brazilian supply, although there are now doubts the remaining 7.5 million mt will be contracted.
Futures markets were unmoved by the news, with the July soybean contract on the Chicago Board of Trade down 2 c/bu on Thursday's close at $8.10/bu, although prices have fallen more than 3% this week already.
Support
Farmers are a key support base for Trump, who will next year hope to achieve a second presidential term.
The government assistance will be the second policy measure that Trump has launched to bolster farmer incomes in the face of falling prices.
Last year, his administration launched a $12-billion aid programme that sought to compensate farmers for low prices, bought surplus goods from the market and sent trade missions abroad to find new markets.
The overwhelming majority of the aid ended up going to soybean farmers, who have effectively been shut out of China, which imports around two-thirds of all soybeans sold internationally.