Soybeans: China’s new bargaining chip in trade war with US?

While US officials express expectations of meaningful progress in the next round of trade talks – where agricultural purchases are likely to top the agenda – analysts suggest soybeans are poised to become a key bargaining chip for China in upcoming negotiations, and a comprehensive deal may not be easily signed.

James Downes, executive co-director at the Centre for Research and Social Progress, an Italian think tank, said that US President Donald Trump was “strongly motivated” to secure a soybean deal with China.

“US farmers have been hurt by China’s refusal to buy American soybeans, which is a major source of economic pressure on rural agricultural communities that largely support the US president politically,” Downes said.

However, unlike the role agricultural purchases played in securing a comprehensive trade deal between China and the US in the first trade war, Downes said a similar agreement appears unlikely to be reached in the near term due to the ongoing broader trade tensions between the two countries.

“China actually holds a lot of cards in its negotiations with the US,” he said. “China is expected to seek substantial concessions as part of any deal, most notably with meaningful tariff reductions and guarantees regarding intellectual property protections.

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