WASHINGTON - Late last week, President Trump said a "phase one" trade agreement has been reached with China. That means the scheduled October 15 tariff hikes - which would have seen them raised from 25 to 30 percent - will no longer occur.
In return, Trump said China says has agreed to buy up to $50 billion in U.S. agricultural goods. Reports also indicate China will buy some intellectual property provisions that would allow American finance companies more access to China's market.
U.S. Treasury Secretary Steven Mnuchin said both parties have a "fundamental agreement on key issues." Anonymous sources told Bloomberg however, that the $50 billion worth of agriculture products touted by Trump is unlikely to be met.
Both sides are working on a deal for next month's Asia-Pacific Economic Cooperation summit in Chile. If a deal still can't be reached, Mnuchin said the planned December 15 tariff hike will happen.
Data from the U.S. Department of Agriculture shows U.S. exports of hardwood lumber to China have fallen 40 percent so far this year. The drop appears to have begun soon after China placed retaliatory 25 percent tariffs on imports of lumber and other wood products.
Many U.S. hardwood lumber firms have seen reduced demand, and have had to make cutbacks and eliminate jobs. Gutchess Lumber, Baillie Lumber, and Northland Corp. all told the Wall Street Journal that demand has decreased from the same time last year. Baillie and Northland have been forced to lay off workers. Gutchess reduced overtime and suspended 401(k) contributions. Northwest Hardwoods said it shut down one of its Washington sawmills because of the trade war, it said.
Still the tariffs remain polarizing. Many see them as a necessary longterm approach. We will see what happens.
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