An analysis by the Illinois Extension Service makes it clear that US trade negotiations face many political hurdles.
Any pact negotiated by the US and other countries must be ratified by the governments involved, and in some cases, it seems many in the US Congress are loath to give President Trump any kind of success in his administration. For this reason, some trade deals may not be finalized until after the 2020 elections.
CHINA TRADE ISSUES
The Illinois FarmDoc said Politico writer Adam Behsudi reported on Wednesday that, “The United States and China are closing in on a deal that includes broad agreement on how the Trump administration will roll back a portion of the tariffs it has imposed on more than $250 billion-worth of Chinese goods, according to two people close to the talks.
Behsudi even said the two sides had reached “an understanding” on how to enforce a US/China agreement, but this is different than saying the two sides have reached an agreement. Apparently, the details of the “understanding” need to be worked out go get an agreement.
But all is not lost. A Chinese delegation was said to be scheduled to arrive in Washington May 8 to hammer out some details.
The Politico story also quoted people familiar with the discussions who said the two sides had reached an agreement on a plan for the US to remove a 10% tariff on a portion of the $200 billion worth of Chinese imports and then lifting the duties on the rest of the items quickly.
However, a 25% tariff the US has imposed on roughly $50 billion-worth of other Chinese goods likely would not be lifted so quickly, the source told Politico. These could be left until after the 2020 election.
USMCA Roadblocks
The Illinois FarmDoc referenced a Wall Street Journal story by William Mauldin that said President Trump’s US-Mexico-Canada Agreement was hitting roadblocks from Democrats and labor groups demand changes.
There is no deadline for the agreement to be ratified by any of the three countries, “but with the US election season approaching, some Republicans and trade experts said Democrats may be seeking in part to deny Mr. Trump a political win – or at least to exact a heavy price for advocating the deal,” the WSJ article said.
Also, the Journal said that some Republicans are pushing for some trade concessions to the two countries, like removing tariffs on steel and aluminum as a way to grease the skids for approval of the new pact there and as a way to soften what many see as President Trump’s hardball approach.
JAPAN TRADE ISSUES
The Illinois FarmDoc referenced a Reuters story saying the US could push for a quick, focused, trade deal with Japan to gain the same access to agricultural markets as some other Japanese trade partners. This narrow deal then could be expanded upon in later discussions.
Such a deal would be welcomed by US farmers.
CATTLE, BEEF RECAP
Cash cattle trading was reported this week at $123 to $124 per cwt on a live basis, down $3 from last week. Dressed-basis trade was reported at $200 per cwt, down $5.
The USDA choice cutout Thursday was down $1.42 per cwt at $228.80, while select was down $2.42 at $215.08. The choice/select spread widened to $13.72 from $12.72 with 107 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday, was $143.90 per cwt, down $0.73. This compares with Thursday’s May contract settlement of $138.97, down $2.40.