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U.S. could decouple from China, President Trump says

U.S. could decouple from China, President Trump says

The two countries have yet to review the Phase 1 trade agreement

By Diego Flammini
Staff Writer

The U.S. doesn’t necessarily have to do business with China, President Donald Trump says.

Appearing on Fox News Channel’s “The Next Revolution” on Friday, the president suggested the U.S. would decouple from China if the relationship between the two countries seems one-sided.

“Well, it’s something that if they don’t treat us right I would certainly, I would certainly do that,” President Trump told host Steve Hilton during the interview which aired Sunday.

Decoupling is “basically what the word literally means,” said Abhinesh Gopal, head of commodity research with Risk Management.

“The U.S. would stop or reduce doing business with China. Trade deals could go out the window and there would be no trade preferences or concessions on duties or fees.”

Mentions of a potential decoupling of the two countries hasn’t affected ag markets early on as corn and soybean futures are higher to start the week, Gopal said.

President Trump’s suggestion comes as the two sides are supposed to review the Phase 1 trade deal signed in January.

As part of the agreement, China agreed to purchase in year one $12.5-billion worth of additional ag goods on top of the 2017 baseline amount of $23.8 billion.

If the countries decouple, that could be significant for the ag sector.

“A real decoupling would hurt U.S. ag exports,” Gopal said. “China has been the main buyer this year.”

The U.S. has exported about $6.6-billion worth of farm goods to China in the first six months of the year.

China appears to oppose a decoupling.

Working together, especially during the pandemic, can help the two economies get through COVID-19.

“Only by sticking together and lending each other a helping hand can we get through the hard times,” Chinese Foreign Ministry spokesperson Zhao Lijian said on Monday. “Trying to solve domestic problems through decoupling is like looking for fish in trees or drinking poison to quench thirst. The country doing so will eventually harm the interests of its own businesses and people.”

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