US-China Trade/Tariff Update

According to an old adage, “the more things change, the more they stay the same……..”  Or do they?  I guess we’ll see, as some relatively significant movement has been made in trade negotiations between the US and China.

Though no conclusion to this situation is imminent, it has been reported that “President Donald Trump announced that the first part (“Phase 1”) of the trade deal between the United States and China will be signed in Washington on January 15.  In a tweet, President Trump wrote that “high-level representatives” from China will travel to the White House for the signing ceremony, and that he will be traveling to Beijing at a later date to begin talks about Phase 2 of the trade deal.  The full terms of the deal have yet to be revealed. However, the United States is expected to suspend tariffs on $160 billion worth of Chinese goods, including smartphones and toys. China is expected to increase purchases of American agricultural products and improve protections for intellectual property. (”https://www.eastwestbank.com)

Any step toward a de-escalation in tariff assessments/enactments is generally considered as a positive step toward the trade war resolution.

Secondly, the long-awaited United States-Mexico-Canada Agreement (“USMCA”) drafted by the administration is finally being recognized and addressed by Congress.  Though from our vantage point there doesn’t seem to be any direct language regarding specific timber/lumber trade expectations, the agreement does generically strengthen the arrangement between our two best trading partners, and the thought in some circles is that a formalized agreement between the US, Canada and Mexico puts additional pressure on China to reconsider the lop-sided trade arrangements the US has been dealing with for decades. Of interest, the December 6, 2019 Weekly Hardwood Review (WHR) reports that though the current level of demand for cherry ended in June, “the 84% year-to-date increase in cherry exports to non-Chinese markets through September – most notably to Mexico – offset exactly half of the lost volume to China…….” A formal USMCA arrangement might strengthen that commitment of Mexican demand.

As they say, though, tomorrow is another day.  And a new day will surely present us with a different twist on the US-Chinese Trade negotiations.  We will try to keep you up-to-date as best we can with news on how the ongoing circumstances continue to affect our hardwood timber/lumber markets.

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