U.S.-China Trade Truce Progresses Unevenly on Soybeans, Aircraft, and Rare Earths

Uneven Progress on Trade Commitments

The U.S.-China trade truce, established to de-escalate tensions, is showing mixed results across its core commitments. These include China's increased purchases of U.S. soybeans, orders for Boeing aircraft, and continued access to rare earth elements. The progress varies significantly among these areas as a summit between U.S. President Donald Trump and Chinese President Xi Jinping approaches.

Maintaining Commerce, Not Ceding Leverage

Analysts suggest that the uneven fulfillment record indicates the truce is primarily serving to keep trade flowing and prevent further escalation, rather than fostering deeper cooperation. Both nations appear unwilling to compromise their strategic advantages. Eric Xiao, head of sales for Asia at CMC Markets, noted that the truce advances most rapidly where the cost is lowest for both parties.

Specifics of Commitment Fulfillment

China has purchased nearly half of its 25 million-ton annual soybean commitment, including a significant one million-ton purchase in a single September week. The May meeting between the superpowers reaffirmed China's pledge to buy 200 Boeing aircraft and resume rare earth magnet shipments, with export controls suspended for 12 months starting last November. However, the delivery of these commitments is inconsistent, and verification is challenging in some instances.

Détente, Not Rapprochement

Larry Hu, head of China economics at Macquarie Group, characterized the current U.S.-China relationship as a détente, driven by a mutual awareness of each other's vulnerabilities. Wendy Cutler, vice president of the Asia Society Policy Institute, clarified that this détente should not be mistaken for a rapprochement, emphasizing that both sides prioritize stability and coexistence over becoming "best friends."

Soybeans as 'Political Trophies'

Soybean purchases often cluster around key bilateral meetings, leading strategist Andy Rothman to observe that activity picks up before summits and then declines. Xiao described these purchases as "political trophies," cautioning against interpreting their fulfillment as a direct indicator of China's broader trade stance, as China buys them out of necessity.