How the Trump-Xi Summit Will Impact Commodity Markets

Trade in agriculture, energy, and rare earth elements has emerged as key leverage in the ongoing trade dispute between the United States and China. These critical sectors are expected to take center stage when U.S. President Donald Trump hosts Chinese President Xi Jinping in Washington next week.

Here is an overview of the key issues at stake:

AGRICULTURE

Agricultural products, particularly soybeans, represent a cornerstone of American exports to China, totaling $29 billion in 2024. Because agriculture is less politically sensitive than other sectors, it remains a prime candidate for bilateral agreement.

During last year’s summit in Busan, South Korea, China committed to buying 25 million metric tons of U.S. soybeans annually through 2028, according to White House reports. U.S. officials also noted that Beijing pledged an additional $17 billion in other agricultural purchases during Trump’s visit to China in May.

Although Beijing has not publicly confirmed these targets, it is currently on track to fulfill the soybean purchasing goals. Meeting the broader targets, however, will likely require Washington to lift a remaining 10% tariff on agricultural imports inherited from the trade war.

Market analysts anticipate potential tariff exemptions, especially following remarks by U.S. Trade Representative Jamieson Greer on September 3 hinting at upcoming measures to boost U.S. agricultural sales to China. Sorghum and corn are widely viewed as the top candidates for these incentives alongside soybeans.

ENERGY

While China has historically been a sporadic buyer of U.S. oil and gas, imports ceased entirely last year after Beijing implemented tariffs of 10% to 15%. Washington has actively sought to revive this trade flow since Trump’s diplomatic trip to Beijing in May.

Recent reports suggest that energy tariffs could be addressed under a proposed $30 billion reciprocal tariff reduction package initiated after the May summit. Removing these barriers could revive a trade corridor that generated between $7.5 billion and $12 billion annually from 2020 to 2024.

Even so, a tariff resolution may not immediately boost U.S. liquefied natural gas (LNG) production. Despite halting direct imports, Chinese buyers have continued to honor long-term contracts with U.S. suppliers by purchasing the cargoes and immediately reselling them to other global markets.

SANCTIONS

As a major buyer of Russian and Iranian crude oil, China has frequently run afoul of U.S. sanctions targeting entities involved in these transactions. Leading up to the summit, Washington has signaled both the potential easing of certain sanctions and the threat of new penalties.

While Trump previously indicated he would consider rolling back some sanctions following his Beijing visit, no changes have been made. Meanwhile, U.S. Treasury Secretary Scott Bessent has led a renewed effort since August to apply secondary sanctions on financial institutions facilitating Iranian trade, though Chinese banks have not yet been targeted in this push.

RARE EARTHS

China’s dominance in rare earth mineral production and its previous export restrictions to the U.S. served as a primary catalyst for bringing Trump to the negotiating table this year. Although supplies have started moving again, supply chain vulnerabilities persist.

U.S. defense, aerospace, and semiconductor manufacturers continue to face procurement challenges. Additionally, some Chinese exporters remain hesitant to ship to the U.S., fearing potential retaliation from Beijing should bilateral relations deteriorate.

According to reports, resolving rare earth supply chain disruptions remains a priority for U.S. negotiators, who continue to press Beijing to ensure uninterrupted shipments of these critical materials.