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Will the USA see a trade agreement with China before 2020?

David Kohl, Contributing Writer, Corn+Soybean Digest

July 23, 2019

2 Min Read
China and U.S. battling on trade.

Trade, tariffs, and their collective impact on various industries are some of the more common discussion points on the speaking circuit. Dr. Tom Payne, Dean of the College of Business at Tennessee Tech University, and I teach the senior-level Interpreting Economic Change course at the Graduate School of Banking at Louisiana State University. Each year we utilize anonymous clicker technology to record responses from the students to increase engagement with our classes. This diverse group, which represented bankers and regulators from 22 states and Mexico, provided a great vantage point on these challenges. Let’s examine the students’ responses to our questions.

What level of impact are the trade and tariff conflicts having on the customers in your region?

Eighteen percent stated that these factors are having a major impact. Forty-two percent of the bankers surveyed indicated that trade issues were having a meaningful impact, but only in some sectors. Thirty-four percent indicated it was having minimal impact, while only six percent felt that it was having no impact.

When asked which industries trade and tariffs were influencing the most, agriculture was the most predominant response, followed by supply chain management and manufacturing disruptions. Some stated that the energy sector and consumers would eventually feel the impact. The Mexican bankers remarked that their customers were being impacted and that some of their industries are seeking other global markets instead of the U.S. to fulfill their trade needs during this time of uncertainty.

Some bankers in certain regions of the U.S. with considerable manufacturing are finding businesses are unable to finish products or have higher costs due to supply chain issues and disruptions. Of course, the U.S. agriculture sector is being impacted across the board, but particularly in commodities such as soybeans and cotton that the Chinese market once dominated.

Will the United States-Mexico-Canada Agreement (USMCA) and a meaningful trade agreement with China be passed in the next 12 months?

Slightly over 50 percent responded “yes” to passing the USMCA. However, only 25 percent of the group felt that a deal with China would be passed in the next 12 months.

I am in agreement with the bankers’ responses. The closer negotiations move toward 2020, the less likely an outcome will occur. When managing your business in this type of environment, focus on the variables that you can control and manage the best you can around the uncontrollable variables that often elicit emotion from the headlines.

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About the Author(s)

David Kohl

Contributing Writer, Corn+Soybean Digest

Dr. Dave Kohl is an academic Hall of Famer in the College of Agriculture at Virginia Tech, Blacksburg, Va. Dr. Kohl has keen insight into the agriculture industry gained through extensive travel, research, and involvement in ag businesses. He has traveled over 10 million miles; conducted more than 7,000 presentations; and published more than 2,500 articles in his career. Dr. Kohl’s wisdom and engagement with all levels of the industry provide a unique perspective into future trends.

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