- Jonathan Ernst/Reuters
- China has offered to purchase close to $70 billion worth of US goods over the next year if the Trump administration backs off proposed tariffs, according to The Wall Street Journal.
- The deal would include purchases of soybeans, corn, natural gas, crude oil, coal, and more.
- It could help alleviate some of the trade tensions between the Trump administration and China.
China has floated a massive purchase of US goods, according to a new report, in an effort to curb burgeoning trade tensions with the Trump administration.
According to Lingling Wei and Bob Davis at The Wall Street Journal, Chinese officials in a meeting with Commerce Secretary Wilbur Ross over the weekend offered to purchase close to $70 billion worth of US goods in the next year if the US backs off proposed tariffs on imports of Chinese products.
As part of the new purchases, China would import larger amounts of US soybeans, corn, natural gas, crude oil, coal, and more, according to The Journal.
The purchases of US agricultural and energy products would be designed to help alleviate some of the simmering trade tensions between the US and China and are the result of a series of back-and-forth talks between the US delegation and Chinese officials.
The tensions stem from Trump’s announcement in March that the US would impose tariffs on $50 billion worth of Chinese goods as punishment for what it says is Chinese companies’ theft of US intellectual property. This move set off a heated tit-for-tat tariff battle, but it also brought the two countries to the negotiating table on a solution to the tension.
An earlier preliminary deal between the US and Chinese delegations also featured a planned Chinese purchase of US goods, along with a US promise to delay tariffs on $50 billion worth of Chinese goods. The deal was seen as a turning point after the proposed tariffs appeared to push the US and China close to a trade war.
Treasury Secretary Steven Mnuchin told CNBC after the preliminary deal that China could purchase $40 billion to $50 billion worth of US energy and up the value of agricultural imports by 35% to 40%.
Given that the value of US agricultural exports to China was about $20 billion last year, Mnuchin’s suggested package would be worth about $47 billion to $58 billion. China also imports about $10 billion worth of US oil and gas, so the proposed purchases would be a major increase.
But the Trump administration ramped up tensions when it announced that it planned to move forward with the tariffs, pending further discussions with China.
According to The Journal, China stressed that the purchases would be void if the Trump administration went forward with the tariffs – an ultimatum that did not play well with Ross and the other US officials.
Buying up US goods could help to diminish the size of the US-China trade imbalance. Trump requested that China reduce the trade deficit, which totaled roughly $375 billion last year, by $200 billion. According to The Journal, Chinese officials believe the purchases could go a long way toward meeting that demand.
The US is also skeptical of the deal, the report said, because the energy purchases that would be directed to China could just come from exports to other countries, something that would mitigate the overall-trade-deficit benefit, and because there is a sense that US farmers could not ramp up production fast enough.