Policy & Regulation

20 Aug 2020

Trump 'Postpones' US-China Trade Talks: Update

20 Aug 2020  by Argus Media   
US President Donald Trump has again called into question the future of trade talks with Beijing, despite a recent surge in US crude shipments to China under the countries' phase-one trade deal.

Trump said late yesterday that he postponed scheduled talks to review the trade agreement because of his anger over how China handled the Covid-19 outbreak.

"I postponed talks with China," Trump said. "I do not want to deal with them now." Asked if he would pull out of the trade deal, Trump said: "We'll see what happens."

A senior administration official subsequently clarified Trump's remarks, noting that senior US and Chinese officials speak on a regular basis to review the implementation of the agreement. "There are no scheduled talks at this point," the official said. "There are no rescheduled talks." US trade representative Robert Lighthizer "continues to have discussions with his Chinese counterparts involving purchases and fulfilling their agreement," the official said.

Under the terms of the phase-one deal, US and Chinese representatives were scheduled to hold a review six months after the agreement took effect in mid-February.

The agreement's progress should be judged on an annual basis, the official said. "We are not yet a year into the agreement and so it is real easy to say you are going to buy so much volume of produce or manufacturing or whatever."

The latest comments add to mixed messages about the US' commitment to the deal. Trump praised the trade agreement earlier in the day, claiming at a briefing in Iowa that China had just made the "largest order of corn in history".

The US official, speaking on background, said Trump did not say "he was walking away from the trade deal, he said he was reviewing it."

Beijing was hoping to publicize the six-month review of the deal as a visible sign of progress on its commitments. Economic disruptions as a result of the Covid-19 pandemic cut trade flows between the two countries just as the agreement went into effect in February. Cumulative Chinese energy imports from the US in January-June were at around 10pc of required amounts, based on an analysis by Washington-based think tank the Petersen Institute.

But there are signs that US crude exports to China are picking up, after initially falling well short of the targets for energy exports under the phase-one deal. At least 12 very large crude carriers are on subjects to load up to 25.1mn bl, or more than 835,000 b/d, of crude at the US Gulf coast for China in September, according to shipping fixture reports compiled by Argus.

Chinese buyers have stepped up purchases of US crude in recent months in what may be an attempt to tone down Trump's anti-China rhetoric in the run-up to November's US presidential election.

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