China’s Ministry of Commerce said on Monday that Chinese companies have stopped purchasing U.S. agricultural products. The decision to stop imports of U.S. agriculture products was in direct response to the announcement last Friday by U.S. President Donald Trump that the U.S. would impose new 10% tariffs on $300 billion of Chinese goods beginning September 1.
The Ministry of Commerce said in a written statement that “This is a serious violation of the meeting between the heads of state of China and the United States related to on-going trade talks and also against the spirit of the trade talks that were held between China and the U.S. in Shanghai last week.”
The Ministry also said it would “not rule out” tariffs on newly purchased U.S. agricultural goods that Chinese companies have bought after August 3.
China is one of the largest buyers of U.S. agriculture products and news of the boycott hit farmers in the midwest there was a resignation that Trump’s trade war with China was going to become much worse for them before it becomes better.
China also announced on Monday that it was going to let the Yuan drop and at the close of the day in Beijing, the Yuan was trading at 7.04 to 1 U.S. dollar, the lowest rate in more than 10 years. This action then spurred the Trump administration to brand China as a “currency manipulator” and by the end of Monday the Dow Jones had dropped 767 points, the greatest single-day decline this year.
The issue of China buying U.S. agriculture products has been one of the hottest issues during the U.S. initiated trade war with China. At the recent G-20 summit in June, China said that it would buy agriculture products “when an agreement was in place.”
However, Trump announced that he had made China agree to buy large quantities of agricultural purchases. When the purchases by China did not begin immediately, before an agreement was in place, Trump accused China of not following through.
According to Washington insiders, Trump felt that he had been deceived by China, but in a message to Trump from Chinese President Xi Jinping, Xi said that China was ready to enact its commitment once a trade agreement was in place, exactly as he had stated in June. Trump said this was not what Xi had agreed to and on August 1st he announced that the U.S. would impose 10% tariffs on an additional $300 billion of Chinese imports.