The trade truce between the U.S. and China might be extended, which is fueling hopes for additional purchases of U.S. agricultural products, including soybeans.
The South China Morning Post reported President Donald Trump and Chinese leader Xi Jinping could extend their trade truce by as much as a year. At the recent Top Producer Summit, Jiang Lyu, the minister of economic and commercial affairs for the Chinese embassy in the U.S., said he’s also optimistic about an extension for at least one year as well as a cut in tariffs. He also confirmed Trump and Xi might be getting ready to sign a final trade deal when they meet in China in April that will include deliverables.
“We have always wanted this trade to be market driven, so the market forces and the market players can play the primary role in all this. As for whether or not this can be fulfilled, I think this is also something that we would like to have the collaboration with the U.S. government because, as I said earlier, this is a, to borrow your word, trade truce. The truce has a timeline of one year. We would like this one year to be extended, preferably into eternity,” Lyu said.
China’s Goodwill Soybean Buy
At Top Producer Summit, Susan Stroud of No Bull Ag says this might be the reason President Trump posted on Truth Social last week that China was purchasing another 8 MMT of old-crop soybeans, even with Brazil’s soybeans $1 cheaper.
“These are trade negotiations — goodwill purchases,” she said. “Although it doesn’t make sense, it’s something that we could quite possibly see. I think the market is really tuned into this visit that Trump is scheduled to make in April to China.”
Will Soybeans Be Included in Tariff Cuts?
Currently, U.S. soybeans still face a 13% import tariff into China, so the first 12 MMT of purchases have been by state-owned enterprises Cofco and Sinograin.
“If the Chinese, Sinograin and the government, is buying, that’s a 10% tariff on themselves. They can wave that,” explains Gregg Doud, president and CEO of the National Milk Producers Federation and former USTR chief ag negotiator.
Dropping the tariff would make it economical for Chinese crushers. Lyu confirmed China will drop the 10% reciprocal tariff on U.S. soybeans if the U.S. drops the fentanyl tariff.
“There is 10% on the U.S. side. That is the reciprocal tariff for Chinese products. The countermeasure, 10%, is now from the Chinese side. This is squarely on the soybeans going into China. If the former 10% from the U.S. side can be removed, of course, China will take away its countermeasures, like the 10%,” Lyu says.
Possible Trade Deal to Be Signed at April Meeting
Lyu is optimistic a deal and deliverables will be made public during the April meeting. Speculation has run rampant since Oct. 30 because the Chinese government has never confirmed the framework or purchase amounts.
Immediately following the meeting in Busan, South Korea, Scott Bessent, U.S. Treasury Secretary, detailed the trade framework between the two countries, saying it included 12 MMT of soybean purchases for this year and 25 MMT for the three years to follow.
“As for those numbers, I cannot confirm nor deny here because you don’t see that from the official announcements from the foreign ministry spokesperson or the MOFCOM spokesperson,” Lyu said.
There was confusion around whether soybean purchase commitments were for the calendar year or the marketing year, but Lyu was able to provide some clarity on the first phase of the framework: “It’s a marketing year and a crop year, so to speak, because that is the logic, right?”
While there’s been no official deal signed, Doud says the U.S. and China are still operating under the Phase One agreement.
“What you’re back to doing in this situation is more transactional. It’s more of a conversation between countries on different issues. You’ve got fentanyl, you’ve got all kinds of different intellectual property issues. Agriculture gets tied back up in that again,” Doud says.
A signed agreement in writing will provide much-needed certainty for the market.