Late Friday afternoon, President Donald Trump announced that a tentative deal with China had been reached. Phase one of the tentative deal will include “A purchase of — from 40 to 50 billion dollars’ worth of agricultural products.” The deal — which has been agreed upon in principle, but still needs to written out and signed — also includes agricultural structural issues, intellectual property, and technology transfer.
Trump even suggested farmers should buy bigger tractors and more land to keep up with the demand. However, many farmers know to wait until the deal is actually signed before upgrading equipment or adding acres. The deal will be completed in two or three phases, Trump said during a news conference. He also stated it could take anywhere from four to five weeks to get the deal papered. During that time, anything could happen or change.
Yesterday Trump tweeted, “My deal with China is that they will IMMEDIATELY start buying very large quantities of our Agricultural Product, not wait until the deal is signed over the next 3 or 4 weeks. THEY HAVE ALREADY STARTED! Likewise financial services and other deal aspects, start preparing I agreed not to increase Tariffs from 25% to 30% on October 15th. They will remain at 25%. The relationship with China is very good. We will finish out the large Phase One part of the deal, then head directly into Phase Two. The Phase One Deal can be finalized & signed soon!
CHINA HAS ALREADY BEGUN AGRICULTURAL PURCHASES FROM OUR GREAT PATRIOT FARMERS & RANCHERS!
— Donald J. Trump (@realDonaldTrump) October 13, 2019
Nebraska Governor Pete Ricketts said, “From forced tech transfer to non-tariff trade barriers, President Trump has rightly spotlighted a host of challenges in America’s trade relationship with China,” Ricketts said. “Since 2012, exports from Nebraska to China have fallen, and the country has been an uncertain trade partner for our state. Our farmers and ranchers would like to see more predictable trade that grows over time. Today’s agreement is a positive step forward in a long process of achieving this goal and right-sizing America’s trade relationship with China.”
Monday morning markets showed little to no change, reflecting everyone’s anticipation to see when this deal actually gets signed.