In what appears to be a direct response to the Trump administration’s decision to end the designation of Hong Kong as autonomous, the Chinese government has reportedly instructed large companies to halt purchases of key agricultural goods from the United States. The move is expected to further damage farmers already hurt by the extended trade wars initiated during the last three years.
Bloomberg and Reuters have both confirmed via multiple sources that previously arranged trades are on hold. Bloomberg has identified specific soy purchases from state-run businesses Cofco and Sinograin have been shelved and that a large pork purchase is similarly delayed. Reuters has verified that large buys of corn and cotton have also been tabled indefinitely.
By pausing them, rather than officially ending them, the Chinese have hamstrung the President. The Phase 1 deal that he repeatedly touted and ceremoniously signed requires China to resume large-scale purchases but provides considerable wiggle room: specifically, it addresses intent on the part of both parties but does not acknowledge any obligation, and it arranges things on a year-over-year basis. China can thus pause their purchases without violating the wording of the agreement, simply by stating they are back-loading the goods toward the end of the year.
With such an approach, China has little risk of retaliatory resumption of tariffs, because they would scuttle the deal while greatly damaging America’s reputation as an honest partner in international agreements (this risk would be virtually zero, but for Trump’s apparent disregard for America’s reputation.) By contrast, the damage to American farmers will be quick to manifest, and may damage the President’s support among that group of voters.
