Global pandemic upends U.S.-China trade deal

WASHINGTON — Just four months ago, throngs of excited Chinese visitors packed the East Room of the White House to capacity to witness President Donald Trump sign a partial U.S.-China trade deal that called for an additional $200 billion in U.S. exports to China. Underlying the numbers was a promise of stability, a detente between the world’s two largest economies in the midst of a trade war.

Those celebratory hopes have been dashed in today’s world of COVID-19.

The global pandemic has led China to fall way short on its pledged purchases of U.S. goods under the trade agreement, according to a new analysis from the Peterson Institute for International Economics in Washington.

Through March, China purchased less than half of the energy, farming and manufactured goods set out in the deal, as the COVID-19 pandemic wracked the Chinese economy and spread across the globe, the research organization found.

Researchers calculated the first-quarter trade goals as one-fourth the annual purchase target set out by the trade agreement. They analyzed U.S. export data collected by the U.S. Census and Chinese import data collected by Chinese customs officials.

The two countries’ data sources contain different figures but tell the same story: China has significantly missed the legal marks required by the deal, raising questions about the measures Mr. Trump will take to enforce the agreement in the middle of an election year and global pandemic.

The White House did not respond to a request to comment on the analysis.

The report found China imported roughly $15 billion in manufactured goods through March, compared with the $28 billion target. As oil prices bottomed out, China imported $87 million in energy products — just 1% of the $6.3 billion target.

And China imported $5.1 billion in farming products, short of the $9.1 billion target. In January, Mr. Trump touted the deal as especially good for soybean farmers, many of whom had been shut out of the Chinese market since July 2018 because of retaliatory tariffs.

The first-quarter shortfall could be seasonal: The American soybean crop is harvested later this year, and could make up for the first-quarter miss, said Mike Steenhoek, executive director of the Soy Transportation Coalition.

Yet Mr. Steenhoek, in an interview Wednesday, pointed to a major caveat in the deal: China committed to buy farming goods only “based on market conditions.”

This year, the soybean crop from Brazil was significantly bigger and cheaper than what the U.S. has produced. He worries the rising value of the U.S. dollar and weak Brazilian real will not make U.S. soybeans competitive.

The trade deal essentially stated that “we can’t force the Chinese to buy U.S. soybeans if U.S. soybeans are twice the price of Brazilian soybeans,” Mr. Steenhoek said. “Well, we’re not at twice the price, but the exchange rate we’re seeing today is certainly a market condition that is not sustainable for U.S. purchases.”

“So that remains a headwind, without a question,” he said.

The energy purchases, which include U.S.-produced crude oil and liquified natural gas, have fallen short in part because prices have fallen off a cliff. The American Petroleum Association pressed the Trump administration last month to push China to meet its commitments.

“China will need access to energy in the near-term and the United States is well-positioned to provide for this need,” API president and CEO Mike Sommers wrote in an April 23 letter to U.S. Trade Representative Robert Lighthizer and the Energy and Commerce departments.

“Further examination of this Agreement may present opportunities to address our domestic oversupply and at the same time, further advance U.S. international objectives,” Mr. Sommers wrote.