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China Stops Purchases of US Ag Products

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China has reportedly told its commodity buyers to stop all imports of U.S. agricultural products. The move is in response to Trump’s planned tariff increase announced last week. Trump is using the tariffs to place pressure on China to reach a trade agreement. China also announced the devaluation of its currency Monday, an action a Rabobank researcher told Bloomberg News is “among the worst-case scenarios.” China appears to be waiting out the upcoming November 2020 U.S. elections to see if the political climate in the U.S. will change. The announcement Monday by China follows news that it was buying U.S. ag products, as promised in prior talks, just not at expected levels due to “market conditions.”

China claims demand for soybeans is weak in the nation as African swine fever has reduced its hog herd and need for feed ingredients. Trump administration officials claimed over the weekend that significant ag purchases may keep the U.S. from enacting the next round of tariffs, before China halted all purchases.

Trade war worries sent Wall Street retreating Monday as some experts fear the rest of the U.S. could join agriculture in a depressed economy. Experts from Morgan Stanley predict a global recession if the trade war escalates through Trump’s threatened additional 25 percent tariffs on China. Trump intends to implement 10 percent of the tariffs next month, the cause for China’s stoppage of U.S. ag purchases and devaluing its currency. Trump accused China of using the devaluation of its currency to retaliate against the U.S., but China’s central bank denied it made the move as an intentional response to the trade war. China still plans to retaliate against the U.S. tariffs that will start in September.

Morgan Stanley representatives told CNBC Monday the firm believes a global recession will come in about nine months if the trade war further escalates. U.S. negotiators met with Chinese officials late last month and plan an additional round of talks at the beginning of September.