China wants tariffs cut to enable $50 billion imports from U.S.: Bloomberg

China wants tariffs cut to enable $50 billion imports from U.S.: Bloomberg
(Reuters) – China will struggle to buy $50 billion of U.S. farm goods annually unless the United States removes retaliatory tariffs on American products, Bloomberg reported on Tuesday.

China would make the purchases only if U.S. President Donald Trump rolls back levies put in place since the trade war began, Bloomberg said https://bloom.bg/2OR9dvt, citing people familiar with the matter.

Trump said on Friday that China had agreed to purchase $40 billion to $50 billion worth of agricultural goods from the U.S. in a first phase of an agreement to end the trade war.

(Reporting by Bhargav Acharya and Rama Venkat in Bengaluru; Editing by Andrew Heavens)

With U.S.-China tensions running high, hopes dim for end to trade war

By Andrea Shalal and Cate Cadell

WASHINGTON/BEIJING (Reuters) – Beijing sharply rebuked Washington on Tuesday for adding some top Chinese artificial intelligence startups to its trade blacklist, dimming hopes for progress in high-level talks aimed at ending a 15-month trade war between the two economic giants.

U.S. and Chinese deputy trade negotiators were due to meet in Washington for a second day of talks on Tuesday, laying the groundwork for the first minister-level meetings in over two months later this week.

A report from the South China Morning Post said China had tamped down expectations ahead of the talks scheduled for Thursday with Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, saying the Chinese delegation could leave earlier than planned because “there’s not too much optimism.”

The mood soured this week after the U.S. Commerce Department widened its trade blacklist to include 20 Chinese public security bureaus and eight companies including video surveillance firm Hikvision <002415.SZ>, as well as leaders in facial recognition technology SenseTime Group Ltd and Megvii Technology Ltd.

The action bars the firms from buying components from American companies without U.S. government approval, a potentially crippling move. It follows the same blueprint used by Washington in its attempt to limit the influence of Huawei Technologies Co Ltd [HWT.UL] for what it says are national security reasons.

Hikvision, with a market value of about $42 billion, calls itself the world’s largest maker of video surveillance gear.

U.S. officials said the action was tied to China’s treatment of Muslim minorities and human rights violations, provoking a sharp reaction from Beijing.

China said the United States should stop interfering in its affairs. It will continue to take firm and resolute measures to protect its sovereign security, foreign ministry spokesman Geng Shuang told a regular media briefing without elaborating.

Major U.S. stock indexes fell on Tuesday, amid the continued tensions between the United States and China, whose tit-for-tat tariffs have roiled financial markets, slowed capital investment, and triggered a slowdown in trade flows.

New International Monetary Fund Managing Director Kristalina Georgieva issued a stark warning about the state of global growth on Tuesday, saying trade conflicts had thrown it into a “synchronized slowdown” and must be resolved.

In her inaugural speech after taking over the global crisis lender on Oct. 1, Georgieva unveiled new IMF research showing that the cumulative effect of trade conflicts could mean a $700 billion reduction in global GDP output by 2020, or around 0.8%.

LOOMING TARIFF HIKES

The trade talks are taking place days before U.S. tariffs on $250 billion worth of Chinese goods are slated to rise to 30% from 25%. Trump has said the tariff increase will take effect on Oct. 15 if no progress is made in the negotiations.

President Donald Trump on Monday said a quick trade deal was unlikely, and that he would not be satisfied with a partial deal.

The two sides have been at loggerheads over U.S. demands that China improve protections of American intellectual property, end cyber theft and the forced transfer of technology to Chinese firms, curb industrial subsidies and increase U.S. companies’ access to largely closed Chinese markets.

Trump launched a new round of tariffs after the last high-level talks in late July failed to result in agricultural purchases or yield progress on substantive issues. China quickly responded with tariff increases of its own.

Washington is also moving ahead with discussions around possible restrictions on capital flows into China, with a focus on investments made by U.S. government pension funds, Bloomberg reported. The news sent shares of chipmakers sharply lower.

Another flashpoint has been a widening controversy over a tweet from an official with the NBA’s Houston Rockets. His backing of Hong Kong democracy protests was rebuked by the National Basketball Association, sparking a backlash.

Trump also called for a peaceful resolution to the protests in Hong Kong, and warned the situation had the potential to hurt trade talks.

Police in Hong Kong have used rubber bullets, tear gas and water cannons against pro-democracy demonstrators in the former British colony, which has been plunged into its worst political crisis in decades.

Beijing views U.S. support for pro-democracy protests in Hong Kong as interfering with its sovereignty.

(Reporting by Andrea Shalal and David Lawder in Washington and Cate Cadell in Beijing; Writing by Andrea Shalal; Editing by Paul Simao)

White House confirms U.S.-China trade talks starting Thursday

White House confirms U.S.-China trade talks starting Thursday
WASHINGTON (Reuters) – Top U.S. officials will welcome a high-ranking Chinese delegation starting Oct. 10 for the latest round of trade talks aimed at easing tensions between the world’s two largest economies, the White House confirmed on Monday.

“The two sides will look to build on the deputy-level talks of the past weeks. Topics of discussion will include forced technology transfer, intellectual property rights, services, non-tariff barriers, agriculture, and enforcement,” White House spokeswoman Stephanie Grisham said in a statement.

(Reporting by Makini Brice; Editing by Catherine Evans)

China buys U.S. soybeans after declaring ban on American farm goods

FILE PHOTO: Soybeans fall into a bin as a trailer is filled at a farm in Buda, Illinois, U.S., July 6, 2018. REUTERS/Daniel Acker

By Tom Polansek

CHICAGO (Reuters) – China snapped up a small volume of U.S. soybeans last week after pledging to halt purchases of American farm products due to the escalating trade war between Washington and Beijing, U.S. Department of Agriculture data showed on Thursday.

The world’s largest soybean importer struck deals from Aug. 9 to 15 to buy 9,589 tonnes for delivery in the current marketing year and 66,000 tonnes, approximately one cargo, for the next year, the data showed.

China’s Commerce Ministry said on Aug. 5 that Chinese companies stopped buying U.S. farm products in the latest escalation of the trade war between the world’s two largest economies.

“You do have some buying going on,” said Arlan Suderman, chief commodities economist for INTL FCStone. “It’s a little bit of a surprise.”

China last year imposed retaliatory tariffs that remain in place on imports of U.S. farm products including soybeans and pork. The duties have slashed exports of U.S. crops and prompted the Trump administration to compensate American farmers for losses over two years with as much as $28 billion.

China said on Thursday it hopes the United States will stop a plan to impose new tariffs, adding that any new duties would lead to a further escalation.

China has largely turned to South America for soybeans since the trade war began last year. U.S. soybean sales to China in 2018 dropped 74% from the previous year.

“Compared to what they used to buy, they essentially have halted – but some have gotten through,” Suderman said.

The sales of 9,589 tonnes for delivery in the current marketing year will probably be rolled ahead to be delivered in the next year, which begins on Sept. 1, said Don Roose, president of Iowa-based broker U.S. Commodities.

The cargo sold for delivery in the next marketing year could have been in the works before Beijing said Chinese companies would suspend purchases of U.S. farm goods, said Terry Reilly, senior commodity analyst for Futures International.

“The government may have just given the green light to say, ‘Let this one go through,'” Reilly said.

“One cargo is not going to change the fact that they’re not buying millions of tons of soybeans.”

(Reporting by Tom Polansek; Editing by Marguerita Choy)

Japan, South Korea agree on need for dialogue to resolve feud on wartime labor and Fukushima

Chinese Foreign Minister Wang Yi, South Korean Foreign Minister Kang Kyung-wha and Japanese Foreign Minister Taro Kono pose for photo ahead of the ninth trilateral foreign ministers’ meeting among China, South Korea and Japan at Gubei Town in Beijing, China, 21 August 2019. Wu Hong/Pool via REUTERS

By Hyonhee Shin and Ami Miyazaki

TOKYO/SEOUL (Reuters) – Japan and South Korea on Wednesday agreed on the need for dialogue to resolve a feud over compensating Korean wartime workers that has spilled into trade and put a deep chill on ties between Washington’s two biggest Asian allies.

Japanese Foreign Minister Taro Kono, speaking after talks with South Korean counterpart Kang Kyung-wha, said both sides shared that view over the dispute, which is a bitter legacy of Japan’s 1910-1945 colonization of the Korean peninsula.

“In that sense, I want to firmly make progress towards resolving (this matter),” Kono said outside the Chinese capital of Beijing, in comments carried live on Japanese public broadcaster NHK.

“I think the fact that we … were able to talk in this difficult situation could lead to big progress towards resolving this problem,” Kono said. “I want to stay in close touch and continue to talk.”

A South Korean official said both sides reiterated their positions but the meeting was meaningful in restoring diplomatic dialogue and reaffirming the need to keep talking, South Korea’s Yonhap news agency said.

Relations soured after the South Korean Supreme Court ordered some Japanese firms to compensate Korean wartime workers last October, a move strongly condemned by Tokyo, which says the matter was resolved by a 1965 treaty normalizing ties.

The feud has spilled over into trade, after Japan tightened export controls on materials vital to South Korean chipmakers and then dropped Seoul from a list of countries eligible for fast-track exports, prompting South Korea to take a similar step towards Japan.

The number of South Korean tourists visiting Japan fell last month to its lowest in nearly a year, amid a far-reaching boycott of Japanese products and services, from cars to beer and tours.

Kang again urged that Japan’s tightened controls be eased, and relayed concerns about media reports and international environmental groups’ claims that Japan plans to release contaminated water from the Fukushima nuclear plant into the ocean, Yonhap said.

Kono also said Japan wanted Seoul and Tokyo to maintain a military intelligence-sharing pact that could expire if South Korea decides not to roll it over this week.

“This is an important framework for the United States, Japan and South Korea and … should be maintained,” Kono said, adding that he had discussed the intelligence pact with Kang.

Though Kang declined to comment after the meeting whether South Korea would renew the deal, Kim Sang-jo, policy chief of President Moon Jae-in, said on Wednesday that Seoul would continue consideration “until the last minute”.

Kono urged both China and South Korea to scrap their import curbs on produce from areas around Japan’s Fukushima nuclear disaster site, where three reactors suffered melt downs after an earthquake and tsunami in 2011.

Seoul said on Wednesday it would double radiation testing of some Japanese food imports, for fear of contamination from the Fukushima plant.

An official of Japan’s Ministry of Agriculture, Forestry and Fisheries said Japanese food products were safe and increased radiation testing was unnecessary.

(Writing by Linda Sieg; Editing by Clarence Fernandez and Simon Cameron-Moore)

Predicting the next U.S. recession, investors apprehensive

FILE PHOTO: Ships and shipping containers are pictured at the port of Long Beach in Long Beach, California, U.S., January 30, 2019. REUTERS/Mike Blake

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – A protracted trade war between China and the United States, the world’s largest economies, and a deteriorating global growth outlook has left investors apprehensive about the end to the longest expansion in American history.

The recent rise in U.S.-China trade war tensions has brought forward the next U.S. recession, according to a majority of economists polled by Reuters who now expect the Federal Reserve to cut rates again in September and once more next year.

Trade tensions have pulled corporate confidence and global growth to multi-year lows and U.S. President Donald Trump’s announcement of more tariffs have raised downside risks significantly, Morgan Stanley analysts said in a recent note.

Morgan Stanley forecast that if the U.S. lifts tariffs on all imports from China to 25 percent for 4-6 months and China takes countermeasures, the U.S. would be in recession in three quarters.

Goldman Sachs Group Inc <GS.N> said on Sunday that fears of the U.S.-China trade war leading to a recession are increasing and that Goldman no longer expects a trade deal between the world’s two largest economies before the 2020 U.S. presidential election.

Global markets remain on edge with trade-related headlines spurring big moves in either direction. On Tuesday, U.S. stocks jumped sharply higher and safe-havens like the Japanese yen and Gold retreated after the U.S. Trade Representative said additional tariffs on some Chinese goods, including cell phones and laptops, will be delayed to Dec. 15.

Besides watching developments on the trade front economists and investors are watching for signs they hope can alert them to a coming recession.

1. THE YIELD CURVE

The U.S. yield curve plots Treasury securities with maturities ranging from 4 weeks to 30 years. When the spread between the yield on the 3-month Treasury bill and that of the 10-year Treasury note slips below zero, as it did earlier this year, it points to investors accepting a lower yield for locking money up for a longer period of time.

As recession signals go, this so-called inversion in the yield curve has a solid track record as a predictor of recessions. But it can take as long as two years for a recession to follow a yield curve inversion.

The closely-followed yield spread between U.S. 2-year and 10-year notes has also narrowed – marking the smallest difference since at 2007 – according to Refinitiv data.

GRAPHIC – Yield curve as a predictor of recessions🙂

2. UNEMPLOYMENT

The unemployment rate and initial jobless claims ticked higher just ahead or in the early days of the last two recessions before rising sharply. Currently the U.S. unemployment rate is near a 50-year low.

“Although job gains have slowed this year, they continue to signal an above-trend economy,” economists at BofA Merrill Lynch Global Research said in a recent note.

Claims will be watched over the coming weeks for signs that deteriorating trade relations between the United States and China, which have dimmed the economy’s outlook and roiled financial markets, were spilling over to the labor market.

(GRAPHIC – Unemployment rate: )

3. GDP OUTPUT GAP

The output gap is the difference between actual and potential economic output and is used to gauge the health of the economy.

A positive output gap, like the one now, indicates that the economy is operating above its potential. Typically the economy operates furthest below its potential at the end of recessions and peaks above its potential towards the end of expansions.

However, the output gap can linger in positive territory for years before a recession hits.

(GRAPHIC – The GDP output gap peaks before recessions🙂

4. CONSUMER CONFIDENCE

Consumer demand is a critical driver of the U.S. economy and historically consumer confidence wanes during downturns. Currently consumer confidence is near cyclical highs.

(GRAPHIC – Consumer confidence is at cyclical highs: )

5. STOCK MARKETS

Falling equity markets can signal a recession is looming or has already started to take hold. Markets turned down before the 2001 recession and tumbled at the start of the 2008 recession.

The recent pullback in U.S. stocks has done its share to raise concerns about whether the economy is heading into a recession. On a 12-month rolling basis, the market has turned down ahead of the last two recessions. The 12-month rolling average percent move is now below the recent highs of January 2018 but still above higher than the lows hit in December.

(GRAPHIC – The S&P 500 has fallen during recessions🙂

6. BOOM-BUST BAROMETER

The Boom-Bust Barometer devised by Ed Yardeni at Yardeni Research measures spot prices of industrials inputs like copper, steel and lead scrap, and divides that by initial unemployment claims. The measure fell before or during the last two recessions and has retreated from a peak hit in April.

(GRAPHIC – The Boom-Bust Barometer🙂

7. HOUSING MARKET

Housing starts and building permits have fallen ahead of some recent recessions. U.S. homebuilding fell for a second straight month in June and permits dropped to a two-year low, suggesting the housing market continued to struggle despite lower mortgage rates.

(GRAPHIC – Housing starts have fallen before prior recessions: )

8. MANUFACTURING

Given the manufacturing sector’s diminished role in the U.S. economy, the clout of the Institute for Supply Management’s (ISM) manufacturing index as a predictor of U.S. GDP growth has slipped in recent years. However, it is still worth watching, especially if it shows a tendency to drop well below the 50 level for an extended period of time.

ISM said its index of national factory activity slipped to 51.2 last month, the lowest reading since August 2016, as U.S. manufacturing activity slowed to a near three-year low in July and hiring at factories shifted into lower gear, suggesting a further loss of momentum in economic growth early in the third quarter.

“The slowdown in manufacturing activity likely reflects, in part, the tariffs that went into effect over the course of last year,” economists at BofA Merrill Lynch Global Research said in a note on Friday.

(GRAPHIC – ISM Manufacturing Index: )

9. EARNINGS

S&P 500 earnings growth dipped ahead of the last recession. Earnings estimates for S&P 500 companies have been coming down but companies are still expected to post growth for most quarters this year.

(GRAPHIC – Earnings fell during the last recession: )

10. HIGH-YIELD SPREADS

The gap between high-yield and U.S. government bond yields rose ahead of the 2007-2009 recession and then widened dramatically.

Credit spreads typically widen when perceived risk of default rises. Spreads have fallen from their January highs.

(GRAPHIC – Junk bond yields jumped in the 2008 recession🙂

11. FREIGHT SHIPMENTS

The Cass Freight Index, a barometer of the health of the shipping industry produced by data company Cass Information Systems Inc, logged a 5.3% year-over-year decline in June. That marked the index’s seventh straight month with a negative reading on a year-over-year basis.

“Whether it is a result of contagion or trade disputes, there is growing evidence from freight flows that the economy is beginning to contract,” Broughton Capital analyst Donald Broughton wrote in the June Cass Freight Index report.

(GRAPHIC – Cass Freight Index – shipments🙂

12. MISERY INDEX

The so-called Misery Index adds together the unemployment rate and the inflation rate. It typically rises during recessions and sometimes prior to downturns. It has slipped lower in 2019 and does not look very miserable.

(GRAPHIC – The Misery Index: )

(Reporting by Saqib Iqbal Ahmed; Editing by Chizu Nomiyama)

Trump push for China trade reform draws wide support at home, abroad

FILE PHOTO: Shipping containers of China Shipping and China Ocean Shipping Company (COSCO) are seen on a container ship at Kwai Tsing Container Terminals in Hong Kong, China July 25, 2018. REUTERS/Bobby Yip/File Photo

By David Lawder, Philip Blenkinsop and Michael Martina

WASHINGTON/BRUSSELS/BEIJING (Reuters) – U.S. President Donald Trump’s blunt-force use of tariffs in pursuing his “America First” trade agenda has angered many, from company executives to allied governments and members of both parties of Congress.

But there’s one effort which has drawn broad support from those who oppose him on almost everything else – his push to force Beijing to change what are widely viewed as China’s market-distorting trade and subsidy practices.

As U.S.-China talks to end a trade war reach their endgame, politicians, executives and foreign diplomats are urging Trump and his team to hold out for meaningful structural reforms in China to address entrenched problems in the relationship that hurt U.S. and other foreign companies and workers.

Trump’s trade war “has let the genie out of the bottle” by lifting expectations that the trade war will force China to reform policies that businesses and foreign governments regard as unfair, said Steven Gardon, vice president of indirect taxes and customs at Lear Corp. Gardon’s firm is an automotive seating and electrical supplier with plants in 39 countries, including the United States and China.

“Now that all these issues have been raised, there’s a lot more domestic political support to address these issues, and I don’t think you can pull back from that,” Gardon said at a Georgetown Law School forum this month. “There’s now pressure politically that they have to be addressed for the long term.”

Gardon’s comments reflect a broad shift in U.S. and international business sentiment towards China’s economic and trade policies, one that is aligned with Trump’s goals, if not his tactics.

Trump’s trade team say they are in the final stages of negotiating what would be the biggest economic policy agreement with China in decades. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin head to Beijing this week to try to accelerate talks with Chinese Vice Premier Liu He. Liu is set to travel to Washington for another round of negotiations in early April.

Eight months into the trade war that has disrupted the flow of billions of dollars of goods between the world’s two largest economies, it is unclear if a deal acceptable to both sides can be done.

China’s President Xi Jinping is seen as reluctant to make economic reforms under pressure from the United States, and Trump has said he may keep tariffs on Chinese goods in place for “a substantial period” even if a deal is struck.

Xi may find it easier to live with the tariffs Trump has imposed on trade than to change China’s model for economic development.

As part of a deal, Beijing has offered to make big-ticket purchases from the United States to help reduce a record trade gap. Trump’s team has said those purchases would be worth more than a trillion dollars over about six years.

While big Chinese purchases might be tempting for Trump’s administration, they would do nothing to address what U.S. firms competing in China or against Chinese firms say are structural problems with a system stacked against them.

The United States complains China engages in systematic intellectual property theft, forces foreign firms to give up trade secrets for market access and spends huge sums subsidizing its own industry. Redressing those complaints would require policy reform at the highest level from Xi and China’s ruling Communist Party.

A survey released by the American Chamber of Commerce in China in late February showed that a majority of member U.S. companies supported increasing or maintaining tariffs on Chinese goods, and nearly twice as many as last year want the U.S. government to push Beijing harder to create a level playing field.

The U.S. tariff demands have even encouraged some reform-minded Chinese officials and private-sector business executives to call for a faster pace of reform in China as it celebrates the 40th anniversary of its first steps toward capitalism.

Lighthizer told lawmakers in late February that Chinese-American business people in particular have urged him to “hang tough” in the talks and not to “sell out for soybeans.”

STAY THE COURSE

When Trump delayed a threatened tariff increase well before a March 1 deadline for a deal, he stoked fears that he may be swayed by the big purchase order and leave longstanding structural problems unresolved.

Since then, a steady drumbeat of lobbyists, company executives, foreign diplomats and U.S. lawmakers from both parties have urged Trump to stay the course on his structural demands.

Representative Kevin Brady of Texas, one of the most pro-trade Republicans and a critic of Trump’s tariffs, recently joined that call.

“While we want China to buy more U.S. goods … it’s even more important for us to hold China accountable to meeting high international standards on intellectual property rights, subsidization, overcapacity, and the other structural ways in which China distorts the global economy,” he said at a House Ways and Means Committee hearing just days after the tariff delay was announced.

Last week, Senate Democratic leader Chuck Schumer, a longtime China trade hawk, took to the Senate floor to urge Trump not to “back down” and take a deal based largely on Chinese purchases of American soybeans and other goods.

On Thursday, Schumer tweeted: “Now’s not the time to drop $200B in tariffs just because China’s close to a deal, @realDonald Trump.”

FILE PHOTO: U.S. President Donald Trump listens to a question as he meets with former hostage Danny Burch, an oil engineer who was taken hostage in Yemen in September 2017, in the Oval Office at the White House in Washington, U.S. March 6, 2019. REUTERS/Jonathan Ernst/File Photo

FILE PHOTO: U.S. President Donald Trump listens to a question as he meets with former hostage Danny Burch, an oil engineer who was taken hostage in Yemen in September 2017, in the Oval Office at the White House in Washington, U.S. March 6, 2019. REUTERS/Jonathan Ernst/File Photo

QUIETLY ROOTING FOR TRUMP

European Union members, traditional allies of the United States, are still smarting about the steel and aluminum tariffs Trump imposed on imports into the United States last year. The EU is also worried that Trump will impose duties on autos. But the bloc shares many of the same frustrations over China’s technology transfer policies and market access constraints.

“We get complaints every day from our companies,” one European official told Reuters in Beijing, noting that despite repeated pledges from the Chinese government to make life easier for foreign companies, little had changed.

EU trade commissioner Cecilia Malmstrom’s assessment of China’s behavior sounds almost like it was written by the U.S. Trade Representative’s office, charging that China has abused global trading rules.

China has “blurred the lines between state and private sector. The state has undue influence,” she said in a Washington speech this month. “Intellectual properties of companies are stolen. State subsidies, direct or indirect, are common. And these impacts are felt at home and abroad.”

Malmstrom says that while the U.S. and EU “agree on the diagnosis,” they differ on tactics, and she argues for a more multilateral approach, citing the EU’s work with the United States and Japan to address the issues through reform of World Trade Organization rules.

Some worry that Europe could lose out if Washington and Beijing strike a deal to purchase billions of dollars more in products to try to shrink the U.S. goods trade deficit with China.

“If China is buying more from America then inevitably it will buy less from Europe,” a second European official based in Beijing said, adding that could, in particular, affect large European multinationals.

But European diplomats and officials acknowledge a begrudging support for Trump’s goals, even if they are repulsed by his blunt tactics. Many are secretly rooting for his success.

“We are against unilateral measures, but nobody is exactly sorry for China. On content we think he does have a point,” said one EU diplomat who spoke on condition of anonymity in Brussels. “Beijing has to understand that without reform, the system could just stop working.”

Trump administration officials insist that he has gotten the message and is holding out for “structural changes” to the U.S.-China relationship, along with an enforcement mechanism that holds China to its pledges.

Clete Willems, a White House trade adviser, told the Georgetown Law School forum that Trump is determined to fix problems with China’s trade relationship that he has railed against for years, long before he ever sought office.

“The notion that he’s just going to suddenly accept a bad deal is totally inaccurate. The president is going to walk away from bad deals,” said Willems, who announced on Friday that he is leaving the White House for family reasons.

(Reporting by David Lawder; Editing by Simon Webb and James Dalgleish)

‘We need it now’: U.S. farm country pins hopes on China trade deal

FILE PHOTO: A tattered U.S. flag flies on an old tractor in a farm field outside Sutherland Springs,Texas, U.S. November 8, 2017. REUTERS/Rick Wilking

By Humeyra Pamuk

(Reuters) – Corn and soybean farmer Lorenda Overman from North Carolina has been selling her crops at a loss and delaying paychecks to her workers since the U.S. trade war with China tanked agriculture prices, and her farm’s debt recently topped $2 million.

If the Trump administration fails to clinch a deal with Beijing soon to end the trade dispute, she says, her operation may have a hard time staying afloat.

“We need some stability, we need some action and we need it now,” Overman, who farms in Goldsboro, said via telephone.

Her desperation reflects the mounting urgency across U.S. farm country over ongoing talks aimed at ending Washington’s trade dispute with China and pulling the U.S. agriculture industry out of its worst crisis since the 1980s.”

U.S. trade negotiators currently locked in talks with their Chinese counterparts are demanding Beijing change the way it does business with the United States, providing more access for U.S. companies, enforcement of intellectual property protection and an end to industrial subsidies.

While the talks mark the closest point yet to an end to the nine-month trade war, the two sides are yet to agree on the core issues which are essential for a deal that would reopen a critical market for U.S. farm goods like soybeans, sorghum and corn-based ethanol.

So far, the American rural heartland that helped carry President Donald Trump to victory in 2016 remains largely supportive of his hard line on trade, saying unfair Chinese practices had to be addressed for longer-term economic gain.

But it has also taken the brunt of the dispute, losing a massive export market. With credit conditions eroding in the agrarian economy and total debt hitting levels unseen for decades, the pain has deepened and patience is wearing thin.

“I voted for Trump and I have no regrets. I still feel like he has a handle on what needs to be done but I am frustrated that we are still sitting here with no deal,” Overman said.

Beijing imposed tariffs last year on imports of U.S. agricultural goods, including soybeans, grain sorghum and pork as retribution for U.S. levies. Soybean exports to China have plummeted over 90 percent due to the trade dispute and sales of U.S. soybeans elsewhere failed to make up for the loss.

Trump last week delayed plans to deepen tariffs on China, citing progress in the current talks.

PLANTING AMID UNCERTAINTY

Agriculture Secretary Sonny Perdue last week said the current debt levels in farm country have rapidly risen to levels seen in the 1980s, when thousands of farm operations financially collapsed after producers dealing with low crop prices fell behind on high-interest land and equipment loans.

Meanwhile, Chapter 12 bankruptcy filings have hit the highest level in a decade in parts of the U.S. Midwest and Great Plains states, according to federal data, though stable farmland prices and low-interest rates have helped.

The administration sought to protect farmers from some of the impacts of the trade war with an aid package of up to $12 billion last year. But it has said it will not provide additional support in 2019 even if the dispute continues.

That heaps pressure on farmers, who must decide what to plant this spring without guarantees they will have a market for it, and without any safety net if they make the wrong choice. U.S. farmers planted 89.1 million acres of soybeans in 2018, the second most ever, but without a market, much of it ended up plowed under, rotting in piles, or in storage.

“If we get a trade deal done and soybeans are worth 20 percent more over the next six months, but we decided to plant all corn because we didn’t know – that’s something that worries a lot of people,” said farmer Derek Sawyer, 38, from Kansas.

He said his debt has risen into the millions of dollars.

“Bankers so far have been OK to work with us as far as restructuring some debt,” he said. “But that rope keeps getting shorter.”

Delays to a trade deal have also kindled worries over the permanent loss of market share, as other suppliers such as Argentina and Brazil replace the tariff-blocked U.S. supply.

“It’s going to be a long time before we gain some of those markets back,” said Bill Tentinger, a 69-year-old third-generation corn, soybean and hog farmer from Le Mars, Iowa.

“If we could have settled this with China in a month or two, we would have seen more excitement in the market,” he said.

He said he borrowed $500,000 to plant this year’s crop, after an “absolutely brutal” 2018.

Chris Pollack, a dairy farmer from Wisconsin which saw hundreds of milk producers go out of business last year, says it is getting harder for the industry to embrace the administration’s focus on long-term gains targeted from the China trade standoff.

His farm has suffered from Chinese tariffs on U.S. cheese and other dairy products, and has been further hurt by Trump’s trade disputes with Canada and Mexico.

“Agriculture didn’t have a whole lot to gain but we had a whole lot to lose,” he said. “Certainly, we want to get stuff straightened out… but right now it’s a real tough sell to a hurting agriculture industry,” he said.

(Reporting by Humeyra Pamuk in Washington; editing by Richard Valdmanis and Lisa Shumaker)

Pompeo says China trade deal has ‘got to be right’: interview

FILE PHOTO: U.S. Secretary of State Mike Pompeo speaks to the media at the Department of Foreign Affairs in Pasay City, Metro Manila, Philippines, March 1, 2019. REUTERS/Eloisa Lopez

WASHINGTON (Reuters) – U.S. President Trump will reject a U.S.-China trade deal that is not perfect, but the United States would still keep working on an agreement, U.S. Secretary of State Mike Pompeo said in a media interview.

“Things are in a good place, but it’s got to be right,” Pompeo told Sinclair Broadcasting Group, according to a transcript released by the State Department on Tuesday.

Asked if Trump would walk away from any deal that was not perfect, Pompeo said, “Yes” and pointed to the Republican president’s rejection of an agreement with North Korea at a summit last week in Hanoi.

Trump last week said that he was willing to abandon trade talks with China, but U.S. advisers in recent days have signaled more positive outcomes.

Pompeo made his remarks following stops in Iowa, where he was attending a conference for farmers, who have been caught up in the ongoing trade war with the world’s top two economies.

“This has to work for America. If it doesn’t work, we’ll keep banging away at it. We’re going to get to the right outcome. I’m confident that we will,” Pompeo told Sinclair.

(Reporting by Susan Heavey; Editing by Steve Orlofsky)

Hours after U.S. troops killed in Syria, Pence says Islamic State defeated

FILE PHOTO: U.S. Vice President Mike Pence speaks to the news media outside the West Wing with House Minority Leader Kevin McCarthy (R-CA) and Sen. John Thune (R-SD) after a meeting with President Donald Trump and congressional leadership about the partial government shutdown at the White House in Washington, U.S., January 9, 2019. REUTERS/Joshua Roberts/File Photo

By Lesley Wroughton

WASHINGTON (Reuters) – Islamic State has been defeated in Syria, U.S. Vice President Mike Pence said on Wednesday, hours after Americans were killed in a northern Syria bomb attack claimed by the militant group.

Pence did not mention the attack in his address to 184 chiefs of U.S. diplomatic missions who gather annually in Washington from around the world to discuss foreign policy strategy.

“The caliphate has crumbled and ISIS has been defeated,” Pence told the U.S. ambassadors and other senior American diplomats, referring to Islamic State.

In separate statements later, both the White House and Pence condemned the attack and expressed sympathy for the deaths of the U.S. personnel.

The Pentagon said two U.S. servicemembers, a Department of Defense civilian employee and one contractor working for the military were killed and three servicemembers were injured in the blast in the northern Syria town of Manbij.

An Islamic State-affiliated website said the attack was the work of a suicide bomber.

Trump made a surprise announcement on Dec. 19 that he would withdraw 2,000 U.S. troops from Syria after concluding that Islamic State had been defeated there. His decision led to the resignation of U.S. Defense Secretary Jim Mattis, who cited policy differences with the president for his departure.

FILE PHOTO: A Syrian national flag flutters next to the Islamic State's slogan at a roundabout where executions were carried out by ISIS militants in the city of Palmyra, in Homs Governorate, Syria in this April 1, 2016 file photo. Omar Sanadiki/Files/File Photo

FILE PHOTO: A Syrian national flag flutters next to the Islamic State’s slogan at a roundabout where executions were carried out by ISIS militants in the city of Palmyra, in Homs Governorate, Syria in this April 1, 2016 file photo. Omar Sanadiki/Files/File Photo

LACK OF PROGRESS

Despite talks of a second leaders’ summit between Trump and North Korea’s leader Kim Jong Un, Pence acknowledged that efforts to convince Pyonyang to give up its nuclear arsenal had not made headway.

“While the president is promising dialogue with Chairman Kim we still await concrete steps by North Korea to dismantle the nuclear weapons that threaten our people and our allies in the region,” he said.

The vice president also criticized China’s “unfair” trade practices and loans to developing countries that pushed up their debt levels as it tries to gain greater influence in the world.

“The truth is that too often in recent years China has chosen a path that disregards the laws and norms that have kept the world state prosperous for more than half a century,” he said. “The days of the United States looking the other way are over,” he added.

Pence said the administration’s foreign policy was based on Trump’s “America First” agenda. “No longer will the United States government pursue grandiose, unrealistic notions at the expense of American people,” he said.

He acknowledged that Trump’s foreign policy was “different from what the world has come to expect” and that the United States faced different threats than during the Cold War.

“Today we are not up against one superpower but several great powers competing with us for preeminence across the world,” he said, saying the United States faced a “wolf pack” of rogue states including Iran, Cuba, Venezuela and Nicaragua.

(Additional reporting by Roberta Rampton and Arshad Mohammed; Editing by Tom Brown and Cynthia Osterman)