Chinese companies halt purchases of US agricultural products

(CNN) -- Chinese companies have halted purchases of US agricultural products, marking the latest escalation of the trade war between the United States and China.

The halt in purchases comes in response to the Trump administration's announcement of new tariffs on Chinese imports last week, China's Commerce Ministry said Tuesday morning. The new 10% tariffs on $300 billion worth of Chinese imports are set to take effect on September 1.

China's Commerce Ministry called the new tariffs a "serious violation of the consensus reached by the two countries' leaders in Osaka." At the June G20 meeting in Osaka, American and Chinese officials had agreed to a cease-fire in the trade war.

State media had earlier quoted officials as saying Chinese companies had ordered US agricultural products after the Osaka summit, but some deals fell through due to "competitive pricing."

China's State Council Customs Tariff Commission also said Tuesday morning it "will no longer exempt US agricultural products purchased after August 3 from import duties."

The latest salvo in the trade war sent global markets plunging Monday. In addition to the halt in American agriculture purchases, China devalued the yuan Monday morning, sparking fear that the United States could retaliate.

The US Chamber of Commerce warned last week that new tariffs "will only inflict greater pain on American businesses, farmers, workers and consumers, and undermine an otherwise strong US economy."

China's halt of US agricultural purchases will hurt America's farmers in dire need of relief. The trade war has forced Washington to come to the rescue of farmers with billions of dollars in aid. Delinquencies on agriculture loans have tripled since mid-2015 to eight-year highs, according to the St. Louis Federal Reserve Bank.

FDIC Chairman Jelena McWilliams told CNN Business last week that the agency is "monitoring very closely" how banks in farm states are being impacted by the trade war.

"We may experience more delinquencies, which then become very difficult for those communities and our ag sector," McWilliams said.

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