What commodity markets can expect from the Trump-Xi summit

The forthcoming summit between President Donald Trump and Chinese President Xi Jinping in Washington next week is anticipated to revolve around key agricultural, energy, and rare earth commodities. These sectors have emerged as crucial components in the ongoing trade conflict between the United States and China. Soybeans, a primary US export to China valued at $29 billion in 2024, are expected to play a significant role due to their low sensitivity to trade disputes.

China's commitment to purchasing 25 million metric tonnes of US soybeans annually through 2028, established at last year's Busan summit, has been largely upheld. However, extending this agreement to other agricultural products may necessitate waiving a final 10% tariff imposed on imports during the trade war. US Trade Representative Jamie L. Jeffrey hinted at potential incentives to boost US agricultural sales to China, with sorghum and corn as potential candidates after soybeans.

In the energy sector, China's historically sporadic but intermittent purchases of US oil and gas have ceased since the implementation of tariffs last year, amounting to between $7.5 billion and $12 billion annually between 2020 and 2024. US officials are pushing for a change, with potential energy tariffs forming part of a $30 billion package of reciprocal tariff cuts discussed after the May summit.

This could potentially reestablish imports, though it wouldn't immediately benefit US LNG producers as Chinese buyers are still fulfilling long-term contracts while reselling cargoes. The issue of rare earths, where China's dominance and export limitations have been a contentious point, remains unresolved. China's control over production and the decision to limit exports to the US have necessitated Trump's involvement in the negotiations.

While more material is flowing from China, the industry remains sensitive, with US firms facing challenges accessing certain materials and some Chinese exporters wary of repercussions if relations deteriorate further.