Home Agricultural Products US and China Working on Deal Concerning ZTE and Agricultural Products

US and China Working on Deal Concerning ZTE and Agricultural Products

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As of Monday, May 14, negotiators were working on a deal that would help to ease the current trade tensions that exist between the United States and China. The deal involves the United States easing trade restrictions on the Chinese telecom company ZTE. In exchange for the United States easing these restrictions, the Chinese government would remove the tariffs that it has in place on certain agricultural products that come from the United States.

This past year, the US government placed restrictions on companies within the United States doing business with ZTE. These restrictions were put in place because it was believed that ZTE was not fully cooperating with trade restrictions placed against the Iranian government.

If the US takes off the sanctions against ZTE, China stated that it will take off certain tariffs against US agricultural products. When the US government placed steel and aluminum tariffs on China, the Chinese government retaliated by placing tariffs on pork products and ginseng. Chinese officials also stated that they would be willing to ease a few other restrictions such as those governing the quality testing of US soybean products.

Another roadblock in the way of the Chinese and United States financial relationship may fall as well. China had been holding up a deal that would have allowed Qualcomm to acquire the Dutch firm NXP Semiconductors. If the ZTE deal goes through, China will examine the details of the acquisition again. Many observers believe that Chinese regulators will look more favorably upon the acquisition the second time around.

While all this is good news on the China/US financial front, there are still obstacles in the way of the two countries. The United States is still upset with China over intellectual property issues. The US also wants to lower the trade deficit that it has with China.

China still wants the steel and aluminum tariffs fully removed by the United States. China is still backing off on many soybean orders from the US, and that is distressing those in farm states. Political analysts believe that the current ZTE action by the Trump administration may be due in part to the fact that Republicans fear big losses in farm states in the mid-term elections if farmers start to feel pain as a result of Chinese tariffs and cancelled soybean orders.

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