According to recent news, US is not satisfied with how China respects the trade agreement. On the other hand, the United States itself does not indicate that it intends to impose any restrictions on China. It is worth mentioning that China buys huge amounts of agricultural commodities, mainly soybeans, corn, wheat and cotton. Meanwhile, due to the energy crisis,China may also buy large amounts of gas or oil.
US Trade Representative Katherine Tai indicated that talks on Phase 1 of the deal would begin with China in the coming days. The US intends to exclude some products from China in terms of tariffs, but taxation will still remain the same. In addition, the United States wants to use all the tools at its disposal to force China to respect the agreement. Tai said today that the US will raise concerns on China's 'state-centred and non-market trade practices' with Beijing during talks on the Phase 1 trade deal, as reported by Reuters. She would not characterize Trump's China policies as failed but noted they have not gotten the US where it needs to be. Tai confirmed that she did not have conversations with Chinese officials on intervening issues that have prevented them from meeting Phase 1 commitments.
It should be remembered that according to the phase 1 trade agreement, China was obligated to purchase additional products worth $ 200 billion. China met 62% of its target, but the pandemic certainly had a big impact on the situation. Nevertheless, it is worth paying attention to the volatility of agricultural commodities during today's session, as any US actions could reduce imports from China.
Soybean and corn are not having a very good time lately. Nevertheless, the seasonality indicates that prices may rebound after the start of the harvest season. Either way, soybean prices are at their lowest since last December. Theoretically, this is good news for investors who are concerned regarding high inflation. Unfortunately, wheat prices are still very high, which shows that food inflation will still remain a major factor to look for. Source: xStation5
