Trade in agriculture,
energy and rare earths has become major bargaining chips in the
trade war between the United States and China and are likely to
feature again when President Donald Trump hosts his counterpart
Xi Jinping in Washington next week.
Here’s what else we know:
AGRICULTURE
Agricultural goods, led by soybeans, are one of the biggest
US exports to China, reaching $29 billion in 2024. They are also
among the least sensitive parts of the trade relationship and
thus a likely area for agreement.
At the Busan summit in South Korea last year, China agreed
to purchase 25 million metric tonne of US soybeans annually
through 2028, according to the White House. US officials say
Beijing then agreed to add on another $17 billion in other
agricultural product purchases during Trump’s visit to Beijing
in May.
Beijing has never acknowledged those agreements, but is
nonetheless on track to meet the soybean commitment. Hitting the
other will probably require exempting agricultural imports from
a final 10 per cent tariff leftover from the trade war.
Analysts expect some waivers after US Trade Representative
Jamieson Greer said on September 3 there could be announcements
to incentivise 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 ground to a halt last
year after Beijing imposed tariffs of 10 per cent to 15 per cent. Washington has
been pushing to change that since Trump’s visit to Beijing in
May.
Bloomberg reported on Tuesday energy tariffs could be part
of a $30 billion package of reciprocal tariff cuts flagged after
the May summit but not yet implemented. That could lead to the
resumption of imports, which annually ranged from $7.5 billion
to $12 billion between the end of the previous trade war in 2020
and 2024.
However, that would not immediately translate to a big new
windfall for US LNG producers. 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, the US 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 production of rare earths and its
decision to limit exports to the US brought Trump to the
negotiating table this year, and 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 the relationship worsens again.
Reuters has reported that 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.