Agriculture, Energy and Rare Earths in Focus as Trump Hosts Xi

Trade in agriculture, energy and rare earths has become a central bargaining chip in the US-China trade war, and the three sectors are expected to feature prominently when President Donald Trump hosts his Chinese counterpart Xi Jinping in Washington next week.

Agriculture

Farm goods, led by soybeans, rank among the largest US exports to China, reaching $29 billion in 2024. They are also among the least sensitive parts of the relationship, making them a likely area for agreement.

At last year's Busan summit in South Korea, China agreed to buy 25 million metric tons of US soybeans annually through 2028, according to the White House. US officials say Beijing later agreed to add $17 billion in other agricultural purchases during Trump's visit to Beijing in May. Beijing has never acknowledged those agreements, but it is on track to meet the soybean commitment. Meeting the additional target would probably require exempting agricultural imports from a final 10% tariff left over from the trade war.

Analysts expect some waivers after US Trade Representative Jamieson Greer said on September 3 that announcements could be made to incentivize US agricultural sales to China. Sorghum and corn are candidates, as historically they were the largest exports apart from soybeans.

Energy

China has been a modest, if intermittent, buyer of US oil and gas over the past decade, but imports halted last year after Beijing imposed tariffs of 10% to 15%. Washington has pushed to change that since Trump's visit to Beijing in May.

Energy tariffs could form part of a $30 billion package of reciprocal tariff cuts flagged after the May summit but not yet implemented, which could lead to a resumption of imports that annually ranged from $7.5 billion to $12 billion between the end of the previous trade war in 2020 and 2024. That would not immediately translate into a big new windfall for US LNG producers, however. While Chinese imports of LNG stopped after the tariffs, Chinese buyers are still fulfilling long-term contracts with their US suppliers but reselling the cargoes after purchase.

Sanctions

China has historically been among the largest buyers of Iranian and Russian crude oil, and the US has sanctioned refiners and other entities for the trade over the years. Ahead of the summit, Washington has raised the possibility of ending some sanctions while also threatening to impose others.

Trump said he would consider lifting some sanctions after his visit to Beijing, although they remain in place. Since August, US Treasury Secretary Scott Bessent has overseen a new push to impose secondary sanctions on banks financing Iranian trade, although Chinese banks have been conspicuously absent.

Rare earths

China's control over rare earth production and its decision to limit exports to the US brought Trump to the negotiating table this year. While more material is now flowing from China, the issue is not fully resolved.

US firms in sensitive industries such as aerospace or chipmaking still struggle for access, while some Chinese exporters refuse to ship to the US for fear of repercussions from Beijing if relations worsen again. The issue was on the US planning agenda, and US officials have repeatedly called on Beijing to honour its commitments to keep the critical materials flowing.