The recently ratified trade deal between the USA and China was welcomed by Australia as a sign of confidence for the global markets.
“This is welcome news. Australia has long called for a reduction, a cessation of the trade war between the United States and China — it was hurting global economic growth, and so we welcome the fact that this agreement has been signed,” Simon Birmingham, the Australian trade minister, said.
The new pact came almost unexpectedly after two years of hostilities between the two parties, although Birmingham characterized it as “a truce rather than a complete elimination of trade tensions between the US and China.”
Under the new deal, China will buy goods worth $200 billion from the U.S. over two years, of which $50 billion are allocated for the purchase of American agricultural products.
The U.S., in exchange, will reduce part of the tariffs imposed on imported Chinese products worth $120 billion.
The minister, however, acknowledged the fact that the deal could potentially harm the farmers of his country by putting constraints on their business with the vast Chinese market.
While the minister conceded farmers could be impacted by the new deal, “we see more upside than downside because of the confidence that it provides,” he said.
“The bulk of those purchases [committed by China to come from U.S. sources] we would expect to happen as part of China’s growth, rather than substituting existing purposes. We’d expect them to be in areas that Australia is not particularly exposed,” he added.
Australia has largely benefitted from the trade war between the world’s two largest economies until now, achieving an increase of 30 percent of agricultural exports to China over the last year.