The escalating trade war between the U.S. and China continues to gain steam. The U.S. announced, and implemented, additional tariffs on Chinese goods last week. China retaliated Monday by imposing additional tariffs on $60 billion worth of U.S. goods.
The sharp turn in trade talks came after U.S. officials said China retracted on certain promises it had already made in previous trade talk sessions.
While the feud between the U.S. and China is making headlines around the world, Arlan Suderman of INTL FCStone thinks it’s important to remember the talks don’t happen in a vacuum, and both sides have studied each other with great scrutiny.
“This really goes back to a playbook, a 1985 document where the U.S. government commissioned a study on how to negotiate with China, and it outlined what to expect out of China,” Suderman said on U.S. Farm Report. “It says it’s very difficult to nail down a deal, because at the end China will try to move the goal post- try to renegotiate some points of it, and if you look at the details of that study, they’re [China] doing exactly what it says.”
China’s last-minute attempt to go back on promises it already made was China’s effort to move the goal post, with the U.S. responding by adding more pressure with additional tariffs, according to Suderman
“What it [the study] says is you have to have a counter tactic of quote, unquote, ‘throwing them off balance,’ and that’s exactly what he did,” he said. “So, now the ball is in their court.”
Despite escalating tensions, China’s Vice Premier traveled to the U.S. as planned last week. The trade talks were brief – only lasting two days – but talks progressed. Now the ball is in China’s court, Suderman said, adding the issue probably won’t be cleared up in a quick manner, which is continuing to pressure commodities.
“They’re certainly throwing traders and the word markets off balance, for sure,” said Chip Nellinger, Blue Reef Agri-Marketing, as front-month soybean contracts are now trading in the $7 range.
While commodity prices seem to be in a free-fall, the President suggested in a series of tweets he would help offset agricultural losses by using the money made from tariffs to buy commodities from farmers. Suderman thinks this is more than just a way to appease Trump’s strong voting base; it’s also a negotiating tool.But see also, among the SCMP headlines May 14:
“There are a couple messages there from President Trump to President Xi, one is ‘I’m willing to walk off this car lot without buying this car,’” Suderman said.
The President donating commodities to developing nations to boost prices one thing. However, buying crops to put into a reserve program is a different scenario, and one that will throw confusion into the market,” he explained....MORE
Inside Out | China should walk away from trade talks, and hit back at US
