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China Not Likely to Uphold Purchase Targets

The phase one trade deal made between China and the US went into effect on February 14th, 2020, outlining the exact means by which the two countries would resolve the trade conflict and move forward with trade relations in the world’s two largest economies. 

 

The phase one trade deal offered a glimmer of hope to the US Pecan growers who had grown accustomed to shipping large quantities of pecans to China each year before the annual New Year’s Celebrations. American Pecans have become a popular gift among Chinese family members and friends during the holidays. 


Shipments of pecans to China had been on the rise and the US Pecan growers council had spent considerable time and money marketing in country and working with officials to lower the tariffs on pecans multiple times, ultimately reducing the tariff to just 7%. 

  • high speed industrial pecan cracker

 

The trade dispute between the US and China changed the trading landscape nearly overnight and US Pecan exporter’s were left holding pecans, looking for new markets. When the US trade office announced a phase one trade deal had been reached, pecan farmers immediately verified the ag commitments made in the trade deal which looked to be very positive for growers. 

 

The phase one agreement stated among other items that China had agreed to purchase an additional $12.5 billion in US agricultural products above 2017 levels which would imply an annual target of $36.6 and $33.4 billion over the next two years. However as of September purchases of covered US agricultural goods are at 12.9 billion, far less than the $36.6 billion commitment. While there is still a little more than a month and a half left in the year, it doesn’t look as if the ag purchase levels will be met, at least in the first year. ₁

American Pecan exports to China have risen since the phase one trade deal, but shipments to China have been minimal. Since the onset of the Covid-19 pandemic, exports to all countries except China have fallen. Asia is the only region where pecan exports have actually risen for the 2019-20 pecan season.

 

Now with the US Presidency likely to transition to Joe Biden in January, it will be interesting to see how this affects the trade between the US and China. 

 

₁.  “US-China Phase One Tracker: China’s Purchases of US Goods.” PIIE, 9 Nov. 2020, www.piie.com/research/piie-charts/us-china-phase-one-tracker-chinas-purchases-us-goods.