The extraordinary trade war President Donald Trump unleashed has been taking a toll on the Chinese and American economies. China is in a far more precarious state, mostly due to preexisting problems, but the new trade agreement is unlikely to move the dial much for either of the world’s two largest economies.
On the surface, the headlines coming out of the historic meeting between Trump and Chinese leader Xi Jinping suggest a big victory for both sides. The agreement calls for the United States to lower tariffs on China by 10%, bringing the effective rate on Chinese exports down to 47%; and for China to delay export controls on rare earths and increase purchases of American soybeans.
Such measures might alleviate some of the pain businesses and consumers have felt since Trump returned to office. However, it’s going to take a lot more to address the wounds that have been festering.
For one particular part of the American economy that’s been hurting the most from the resurgent trade war with China, the agreement may be coming too late.
American soybean farmers have been reeling from China’s effective embargo on the commodity that began in May, when higher tariffs went into place. Up until this week, China hadn’t purchased any American soybeans, the top agricultural export for the US. China has historically been the largest export market for American soybeans, so the embargo has significantly depressed American soybean prices for the past few months.
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