Trade war watchers got mixed signals again this week as U.S. politics muddied the potential for a trade deal.
After Congress and President Trump passed a near-unanimous critique of China’s handling of Hong Kong’s democracy protests, China condemned U.S. intervention in Chinese domestic politics, which threatened to overshadow trade focus.
Since then, a new bill was passed by the U.S. House of Representatives, issuing fresh sanctions against China’s government and its political leaders. The Uighur Act was passed in response to China’s treatment of the Uighur Muslim minority group in northwest China. According to the United Nations, the population is under strict surveillance and over a million Uighurs have been detained. If the Senate and President Trump support the House’s measure, Chinese retribution could be fierce.
Despite these concerns, China made trade-friendly overtures, dropping retaliatory tariffs on U.S. soybeans, sorghum, cotton, and pork. This would allow for more Chinese imports of U.S. commodities, something China desperately needs as food inflation is rampant there.
Markets reacted tepidly, climbing modestly. As of midday Friday, January soybean futures sold for $8.88 per bushel, March cotton changed hands at 65.5 cents per pound, and February hogs fetched 68 cents per pound.