U.S. President Donald Trump signalled on Friday the possible conclusion of a long-awaited Sino-American trade deal.
Trump referred to a “phase one” agreement that could be signed in Iowa.
Although China has not confirmed that they would be willing to sign the deal in the US, the Chinese Commerce Ministry has confirmed a “consensus on principles” between negotiators.
White House economic adviser Larry Kudlow told the press on Friday that a deal was near although not a 100% complete. White House trade adviser Peter Navarro told Fox Business Network that three phases of the trade agreement would be required, as Washington is seeking a credible enforcement mechanism.
Beyond agriculture, the first part of the agreement would include financial services and monetary policy. The U.S. is seeking to reopen the Chinese market for US agricultural goods, as well as access for 100% US-owned companies to the Chinese financial services sector. A Chinese ministry website also suggests there in-principle agreement to allow greater openness for Stock Market listings and capital repatriation.
Trump and Xi had been expected to ink the agreement at the Asia Pacific Economic Cooperation summit in Santiago, Chile on November 16-17. Still, last week Chile withdrew as host of the meeting.
Iowa is one of the worst-afflicted farm states whose soybeans have lost market share in China during the 16-month tariff war. Iowa is also a key state for Trump in the 2020 elections. In 2016, Trump achieved a convincing 51%-to-41,7% victory in Iowa over Hillary Clinton. But it is a swing state.
Trump has sought to offset the damage to farmers from the Sino-American trade war by successfully pushing through $28bn in trade subsidies for farmers over the last two years. Farmers are a strong Republican demographic group with Trump boasting a 71% approval rating among in August, according to a Farm Journal Pulse’s poll.
If all goes well, the deal could also ease tariffs on Chinese-made laptops, toys and electronics, just before Christmas shopping reaches its peak.