The agreement between the Presidents of the United States and China at the weekend to suspend their trade war will be welcomed everywhere. It is just a 90-day ceasefire but it contains the ingredients for a return to normal trade rules.
Donald Trump has agreed to suspend the latest tariff increases he had planned to impose on selected Chinese imports from January 1 and Xi Jinping has agreed not to impose retaliatory tariffs on a range of American imports to China, notably agricultural products.
Returning from the G20 summit in Buenos Aires, Trump described the agreement as "an incredible deal" that will have an "incredibly positive impact on farming". Trump has clearly been feeling some heat from American farmers over his trade war and no wonder. China is a big importer of American products such as soybeans and pork and has retaliated strongly.
Sales of US soybeans to China had dropped by 98 per cent this year. Pork exports fell by 36 per cent from January to September. US farm incomes are expected to fall 13 per cent this year and farm debt levels are forecast to hit their highest in a decade.
Trump has increased farm subsidies by US$12 billion this year to compensate for some of their losses but farmers fear their big Chinese markets will be permanently lost to other producers such as Brazil and Argentina unless the trade war ends soon.