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Trump/Ross Trade Deal Brings in Chinese Chicken, Raises Natural Gas Prices

Conservative blogger Gordon Howie is struggling to find signs of hope from the Republican President with whom he is stuck. He cheers tentatively for the “gigantic“, “herculean” trade agreement with China that Commerce Secretary Wilbur Ross announced last week.

Yes, Gordon, those are mock quotes:

Trade experts were quick to point out that the agreement, which largely focuses on agricultural goods, energy and financial products, does nothing for U.S. manufacturers, long a source of tension in the relationship with China.

“These are modest moves which by themselves will not have much effect on the U.S. economy,” said David Dollar, a senior fellow at the Brookings Institution and former Treasury Department official [“New China Trade Deal Is Big But Not as Big as Trump Administration Says,” AP via Fortune, 2017.05.15].

China says they’ll start buying U.S. beef by July 16, but lifting the beef ban was in the chute last year. The Chinese appear to be squeezing all the leverage out of the beef ban as they can, now using it to get us to buy their cooked chicken, even as they keep out our chicken, a ban in place since our Midwest bird flu outbreak in 2015.

The deal also opens the door for U.S. companies to export liquefied natural gas to China… but wait: won’t reducing U.S. supply increase U.S. prices?

A number of U.S. companies are seeking permits to build facilities to process liquefied gas, which would allow America to become a net exporter of gas, something it has not been since the 1950s. China is attempting to turn to natural gas as a way to reduce its dependence on coal and combat the country’s extensive air pollution. The move would allow China to diversify its supply and provide a significant market for American suppliers — though the expansion could boost prices for U.S. consumers.

Ross downplayed the impact, pointing to the decline in natural gas prices. “If you look at it on a historical basis, there’s plenty of room to go back up,” he said. “It’s not as though this is going to wreck anybody’s pocketbook” [“Commerce Secretary Ross Calls the New U.S.-China Trade Deal a ‘Herculean Accomplishment’,” AP via Fortune, 2017.05.11].

This is the same Wilbur Ross who said jacking up the cost of building a home by $1,236 with new tariffs on Canadian lumber is a “small increase.” It sounds like it’s been a long time since billionaire investor Wilbur Ross paid his own gas bill or bought his own lumber at Menard’s.

The agreement also makes some “initial commitments” to open up financial services, but an international trade expert calls the language “underwhelming” and “aspirational.” Don’t let Ross or Trump fool you—this agreement by itself doesn’t do much:

Randal Phillips, Mintz Group’s Beijing-based managing partner for Asia, said that Washington was too focused on selling more to China and should instead seek to address structural imbalances created by Chinese industrial policies and barriers to investment.

“That’s going to be the challenge, and hopefully the Trump administration doesn’t start declaring victory,” he said [Ayesha Rascoe et al., “U.S., China Agree to First Trade Steps Under 100-Day Plan,” Reuters, 2017.05.12].

Cheap canned chicken from China, in return for maybe some beef sales and higher gas bills. Gordon, I am not enthused.


  1. Robert McTaggart 2017-05-15 19:03

    The solution to the low price of natural gas…is the low price of natural gas.

    I wonder what that means for heating costs over the winter, or the costs associated with backing up renewables when they are not available.

    I also wonder given current geopolitical events if the export of liquefied natural gas to Europe is being diverted to China as a favor to Russia. Originally, that was to provide energy security if the Russians cut off the supply in Europe…but I guess the oil and gas men will sell it to both Europe and China.

    Nevertheless, China certainly needs to do all it can to avoid burning coal, and gas would help.

  2. Porter Lansing 2017-05-15 19:19

    Don’t eat canned or pre-cooked frozen chicken from China. Grocery store deli counters sell a safer, freshly cooked chicken. I use it and their rotisserie chicken all the time.

  3. grudznick 2017-05-15 19:56

    Mr. Howie, I must remind all of you, is insaner than most.

  4. Don Coyote 2017-05-15 20:21

    @cah: “Cheap canned chicken from China, in return for maybe some beef sales and higher gas bills”

    That’s assuming that domestic and global natural gas supplies will remain constant (they won’t with increased supplies coming online and increased capturing of flared gas), that global demand will increase (Moody’s is forecasting a flat market past 2020) and that production costs won’t drop (increased efficiencies in drilling).

  5. Robert McTaggart 2017-05-15 21:00

    Global demand for electricity won’t change until it actually does, so the models reflect best guesses given currently available data. It will increase as more of the third world demands the standard of living that we do (refrigerators, TVs, air conditioning), and the rest of us start to recharge electric cars or buy an additional energy-efficient freezer, or a small refrigerator next to the comfy chair to hold the beer during the football game.

  6. grudznick 2017-05-15 21:10

    Dr. McTaggart is righter than right, and he is not even pointing out that our bigger and bigger Teevees and the ever expanding football leagues contribute to this gluttony of electricity we all, Libbie and non-Libbie alike, share in. If you whine about pipelines and nuclear power, then you need to shut up until you are living in a skin tent on the prairie or in the woods with no ‘lectricity.

  7. Robert McTaggart 2017-05-15 21:35

    Joe and Jill Public do not want to change when they do things or how they do things according to the reliability of energy on the grid. They pay the utility to figure that out, or they pay a lot more to live off of the grid.

    Energy consumption is correlated to economic activity. Note our energy demand is flat today and our economy is basically flat. Economic activity is what generates the monies to pay for valued programs like health insurance or social security or environmental protection.

    So if we must generate a lot of energy, at least make it clean. Either energy storage works, or carbon capture for natural gas works, or we do nuclear, or all of the above.

  8. jerry 2017-05-16 01:02

    Porter, that cooked chicken at the markets and fast foods is exactly what is now going to be imported as well as canned chicken. What about South Dakota producers of chicken? Wilbur and Gordo could care about how chicken producers are treated. More beef producers selling less than 30 month old beef on the market to China looks bigger.

    As it now looks, eggs will now be more expensive as well. So the, “It’s not as though this is going to wreck anybody’s pocketbook”, are not even going to allow us to eat the cake Marie Antoinette spoke of. China has got us just where they want us, thinking like we bested them while they laugh their arse’s off. We pay more for gas and they pay less, we get the pollution and they get the giggles. Life is funny like that.

    No mention of the price of those 30 month old critters will now suddenly go up, because Denmark and Spain for two European countries, have increased their exports to China in beef and pork. No secret to the world that trump can only bring bankruptcy to any deal he is involved in. He has one helluva track record in that. BTW, cattle futures show an increase but that is due to grilling season not the trump shafting season. Literally all smoke and mirrors to sell gas Key words, “should move”. I would look a lot better if I “should move” my hairline forward, now that puts it into the right light.

  9. Adam 2017-05-16 02:25

    Howie controls a reasonably large West River demographic, but it all boils down to the abortion and gay marriage (God or government) crowd. It’s no deeper than, “you’ve gotta protect life.”

    If it wasn’t him, it’d be some one else at the top of that local pyramid scheme.

  10. Adam 2017-05-16 02:29

    Chinese chicken is likely 50% rat. Watch out for the dark meat cans.

  11. jerry 2017-05-16 04:33

    I am all for protecting life. I think that republicans should get on the band wagon and support Medicaid Expansion, less expense to adopt, childcare that will cover the child through school, an top notch education. Healthy issues for both mother and child. Damn straight, I am pro life in that regard.

    Not true about the rat meat in chicken as you can see the chicken clearly in the containers at the market. Catholics love rat for Lent as it is a delicacy. Ask Gordo or Troy or Rounds as they are clearly rat lovers or something like that.

  12. Cory Allen Heidelberger Post author | 2017-05-16 10:47

    Coyote, your argument isn’t with me; it’s with Ross and with the law of supply and demand. Exporting natural gas to China means natural gas in the U.S. will cost more than it would have otherwise. Ross says that’s o.k., because the price has gone down in the past, which he takes as an excuse to raise prices for the sake of a trade deal to make his boss look good.

    If a commodity costs $20, and then the market drops the price to $10, that doesn’t mean I should celebrate the President raising the price to $15… especially when there’s no apparent reason for raising the price other than to help certain fossil-fuel business friends make more money. What is the average consumer getting out of this increase in natural gas prices?

  13. Vance Feyereisen 2017-05-16 14:15

    Seen an article somewhere that noted trumpy was getting rid of “Energy Star” ratings that we see on newer appliances. Seems the government agency that does the rating also rates buildings. Trump buildings.

  14. Robert McTaggart 2017-05-16 14:20

    It wouldn’t surprise me if the industry puts something together to replace the energy star rating. Some consumers don’t want to spend the extra money on inefficiency.

  15. Rorschach 2017-05-16 15:38

    Chickity China the Chinese chicken. You have a drumstick and your brain stops tickin’.

    How can I help it if I think you’re funny when you’re mad?

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