(Bloomberg) -- President Donald Trump has held off imposing tariffs on Chinese exports while his government reviews a trade deal struck during his first term, hoping for more purchases of US oil, gas and farm products.
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That may be easier promised than achieved. China’s years-long push to diversify its imports — in part as response to that trade war — and a cooling economy have left Beijing with far less room for maneuver when it comes to opening up its market in order to shrink a gaping trade surplus.
The incoming administration has already focused on the gap between China’s promises back in 2020 and reality. The world’s biggest importer ended up missing its targets under the first trade deal. Over two years blighted by the pandemic, the shortfall was most pronounced in energy. For items like liquefied natural gas, crude oil and coal, China ended up buying only about one-third of what it had promised. For agricultural goods — grains, soybeans and meat — it met 83% of its commitments.
New Secretary of State Marco Rubio has said American LNG should be used as leverage in a new round of trade negotiations, while Treasury Secretary pick Scott Bessent has said he’ll push Beijing to resume its agricultural purchases and perhaps even pursue a “make-up provision.”
But China has used the intervening years to bolster its defenses on trade, including raising production of its own food and energy to cut its import bills. There’s unlikely to be much enthusiasm in Beijing for compromising its security of supply to appease an antagonistic trading partner.
Overseas sources of commodities have also been diversified. In 2016, the year Trump was first elected, the US accounted for more than 40% of Chinese soybean imports. That’s fallen to less than 20%, according to Chinese trade data covering the first 11 months of last year. Brazil in particular has picked up the slack.
And since the invasion of Ukraine, China has had the added bonus of vast quantities of sanctioned commodities sitting on its doorstep in Russia, a major supplier of oil, gas and coal as well as grains and metals.
LNG is a case in point. During the last trade war, US exports to China came to a juddering halt for much of 2019, but the availability of cheap Russian fuel makes that far less pertinent now.