The U.S. and China Could Delay Tariffs After All

Investor heads are spinning.

Earlier today, futures were down more than 100 points after the South China Morning Post said China and the U.S. were unlikely to reach a trade deal ahead of the Sunday deadline.  

Then, futures raced higher on reports the U.S. and China are planning to delay the 15% tariffs set for December 15, as noted by The Wall Street Journal.  All as both sides continue to “haggle over how to get Beijing to commit to massive purchases of U.S. farm products.” 

However, nothing is set in stone.

It’s all up to President Trump if he’ll extend the Sunday deadline.  

What we do know is that the U.S. wants China to guarantee its pledge to buy more American soybeans, poultry, and agricultural products, which appears to have happened.  In fact, between September and November 2019, China imports of soybeans increased 13 times year over year.

 “Trump has made clear that more farm buys from China are his top priority for a near-term deal with Beijing. Other issues at the heart of the trade war include Chinese subsidies to domestic companies and pressure on U.S. firms to hand over technology,” says The Wall Street Journal.

At the same time, China may have guaranteed a tariff delay, as well.

All after removing some tariffs on U.S. agricultural goods, including soybeans and pork.  

“The goal (of this move) is to expand purchases and reassure the United States,” said a Chinese source who advises Beijing, as quoted by CNBC. “It should be interpreted as a positive signal. Despite the many political difficulties, the two sides face, economic and trade cooperation and moves to stop the escalation of the trade war are in the interest of both parties.”

China has also said it hopes to make a trade deal with the U.S. as soon as possible.  

At this point, no one has any idea what may happen.  It’s all a wait-and-see.