Rare earth general licenses, soybean purchases show durability of US-China trade truce – what’s next?
With each passing day, the trade truce struck by Xi Jinping and Donald Trump in Busan looks more durable.
In the month since the two leaders met, Beijing and Washington have both taken significant steps to show good faith by rolling back countermeasures, lifting sanctions, pausing trade investigations, and reopening communication channels between military and security authorities.
This week was no exception, with two specific developments showcasing both sides’ commitment to holding the line:
- Washington updated its timeline for China to purchase American soybeans, scrapping an unrealistic end-December deadline.
- Beijing all but confirmed it is issuing general licenses covering export-controlled rare earth products.
Both measures have major implications for US-China relations and global markets. Let’s take them in turn.
First, on Wednesday, US Treasury Secretary Scott Bessent said that China now has until end-February to purchase 12 million metric tons of US soybeans, and is on track to do so.
- Bessent downplayed the doubling of the original two-month timeline announced by the White House on November 1, stressing that Chinese buyers are “in a perfect cadence” to hit the new deadline.
Practically, the additional flexibility is a huge gift to Chinese buyers. Because the deal is structured around volume rather than value, China is on the hook to buy US beans even if they’re uncompetitive – and right now, they are.
- US soybeans have been more expensive than Brazil’s since late October, when markets began pricing in a deal.
- Chinese state-owned buyers are only purchasing out of political obligation – and commercial buyers have no reason to bother.
Here’s the kicker: Brazil’s harvest season is now beginning, with a record crop of soybeans expected. As fresh supply hits the market in January, the glut of Brazilian beans should drag down global oilseed prices.
- US soybean prices will almost certainly follow, saving Chinese buyers some serious dough.
Second, on Thursday, commerce ministry (MofCom) spokesperson He Yadong essentially confirmed an earlier Reuters scoop that Beijing is now issuing streamlined “general licenses” to facilitate exports of rare earth products – a core element of the Xi-Trump trade truce.
In classic MofCom fashion, He kept things vague: We still don’t know how many exporters have secured general licenses, or exactly which export controlled products are covered.
Still, the new licenses are welcome news for companies that need critical minerals from China.
- First, this development indicates that MofCom has worked out the overall process for issuing general licenses for rare earths and related products.
- This should subsequently reopen the rare earths tap for major Chinese exporters and their largest (non-military) customers overseas – with US and EU firms at the front of the queue.
It’s also encouraging for anyone hoping the US-China trade truce will hold.
- Beijing’s critical mineral export controls have proven to be perhaps the most contentious trade war tool, and a major factor pushing Washington to negotiate.
- That makes reaching a mutually agreeable compromise whereby Beijing restores US access to these materials absolutely central to sustaining the agreement in the medium term.
That said, there’s still plenty of room for misunderstandings around sensitive issues – like whether companies that serve both large commercial markets and defense clients (think Boeing, Honeywell, and SpaceX) will be included in the scope of general licenses.
But this is key: So far, both Beijing and Washington have shown a great deal of flexibility and patience as they translate their leaders’ agreement in principle into a framework for moving forward in practice.
Putting it all together: The training wheels are off, and the US-China deal looks poised to go the distance in 2026.
- That’s great news for businesses on both sides of the Pacific, with firms already reaping the benefits of lower tariffs, fewer sanctions, smoother supply chains, and reduced uncertainty.
With most provisions now in place, the big question around the Trivium water cooler is, “What next?”
- Is this simply a tactical truce to buy time for Beijing and Washington to reposition for a much longer geopolitical tussle?
- Or could we be edging toward a strategic realignment, where “the G2” reconcile key differences and lean into their vast economic synergies, ultimately reshaping the global order?
I’ll admit the past decade of US-China relations, and most of the recent policy signals, support the tactical truce hypothesis – but it’s worth contemplating whether a larger realignment is still on the table.
For one, Trump clearly wants to secure his place in the history books.
- As his lame duck era approaches, and his window to win a Nobel Peace Prize closes, he’s undoubtedly thinking about other ways to ensure his legacy.
- His anti-trade, anti-globalist reputation shields him from accusations of “selling out” to China – just as staunch anti-Communist Richard Nixon was able to pursue rapprochement with Mao Zedong.
For his part, Xi may view a grand bargain with Washington as the only viable path to a multipolar world order that doesn’t risk conflict.
There have also been other small but notable signs that a deeper realignment isn’t off the table, including:
- Xi seeking Trump’s support in responding to Japanese PM Sanae Takaichi’s unprecedented comments about mobilizing defense forces in the event of a “Taiwan contingency.”
- Trump’s glowing assessment of Sino-US relations since October, and his obvious enthusiasm for his planned April 2026 state visit to China.
- Treasury Secretary Bessent characterizing China as “an ally” at an event in New York this week.
As we pore over the read-out of the Central Economic Work Conference next week, we’ll be keeping an eye out for any indication as to whether Beijing views this truce as a waypoint – or the start of something bigger.
Even Rogers Pay, Head of Agriculture and Trade Research, Trivium China