A trade deal announced by the White House between the United States and China last week would indeed be a breakthrough, especially if aspects regarding Beijing’s future purchases of farm goods are to be taken as true.
But that appears to be one of the big problems with the “phase one” deal — many economists are skeptical about its big promises.
According to reporting from CNN, the U.S. is planning to cut in half the rate on tariffs on $120 billion of goods imported from China. The White House has also canceled a new round of tariffs that were set to start over the weekend.
In exchange, China has allegedly agreed to change how it deals with intellectual property rights on U.S. goods entering the country, and will not require American companies to give access to tech secrets in order to do business there. China will also reportedly purchase $50 billion in agricultural products grown in the U.S.
On that last point, however, economists warn that the administration may be overselling the promise, and that China may not buy that amount. In 2017, Markets Insider reported, China bought less than half that amount.
Trump told reporters at the White House that Chinese farm purchases would hit $50 billion. https://t.co/WUHhYEs3Vk
— We Are Iowa Local 5 (@weareiowa5news) December 14, 2019
“There are rightfully many doubts about the president’s claim that China will purchase $50 billion in ag products in a single year,” Brian Kuehl, co-executive director of Farmers for Free Trade, told the publication. “Market realities including supply and demand as well as inspections and regulations all create enormous barriers to completing these purchases next year.”
Deborah Elms, executive director of the Asian Trade Centre, matched Kuehl’s skepticism in a statement she gave to CNBC.
“I would be willing to take a bet … that we will be back at this table in relatively short order even if we get a deal, because the ability of the Chinese to actually match those purchases is going to be limited,” Elms said.
Elms called it a “crazy amount” of agricultural goods that China would have to buy in order to meet what the Trump administration has said will happen. China so far has not commented on the amount of agricultural goods it plans to buy in the future from the U.S.