Earlier this month, the Trump administration announced a deal with China that would open up trade on precious minerals, lower tariffs, and increase agricultural purchases. Like most of the Trump administration’s trade announcements, there was no official text or signed documents made public. So, what should we make of this announcement? Is the China deal an actual trade agreement, or just a promise to finalize an agreement in the future?
The implications are important for U.S. farmers, who over the next several months will be meeting with their bankers to line up loans and make planting decisions for 2026. According to a fact sheet by the Trump administration, the deal includes a commitment from China to purchase 12 million metric tons (MMT) of soybeans in 2025, and a minimum of 24 MMT of soybeans for the next three years. That amount is slightly below the average Chinese purchases of soybeans since 2020 of around $28 billion a year. China has yet to publicly confirm the White House claims on specific amounts or timing of soybean purchases.
A further complicating factor is continued Chinese tariffs on U.S. agricultural goods. According to Inside U.S. Trade, the Chinese Ministry of Finance announced that for one year it would suspend a 35% tariff that affects food and agriculture imports, but would retain an existing 10% tariffs that affects soybeans, sorghum, and beef, among other agricultural goods. The Wall Street Journal reports that China likely will insist that any purchases it makes will be based on “market prices,” and if market prices are cheaper coming from another country, China may not meet the targeted numbers touted by the Trump administration. Progressive Farmer/DTN reported that, when considering the 10% tariffs, Brazilian soybeans are cheaper than those coming from the U.S. On cue, Reuters reported last week that China made purchases of Brazilian soybeans from global grain giants Cargill, ADM, Bunge, and Louis Dreyfus. The Associated Press reported on government data showing that China has only made small soybean purchases since the announced deal, raising questions about whether the 12 MMT target can be met — especially as China currently has a glut of soybeans stockpiled to meet most of its immediate needs.
During the first Trump administration, the U.S. and China agreed to what was called a Phase One deal. As part of that agreement, China agreed to purchase $80 billion of agriculture goods from the U.S., but ultimately only purchased $61 billion over the years covered in the deal.
IATP has been tracking and assessing global trade agreements since the 1980s. When assessing trade announcements, here are five things we are looking for to assess how solid the deal is, and how they relate to this purported deal with China:
- Is there a publicly agreed upon text for all to read? There is an old saying in trade negotiations: “Nothing is agreed until everything is agreed.” Public announcements about part of an agreement are a sign of progress and can provide a framework to finalize a deal. But the details and fine print matter. The full 2020 agreement with China is posted on the USTR website, but so far, the only available texts for the current deal are the White House fact sheet and a press release.
- Does that text include language indicating that it is legally binding? Again, public statements of an agreement are a sign of progress. Government fact sheets summarizing discussions are helpful. But ultimately an agreement must be implemented and all the details including a timeline agreed upon. That agreement must include language indicating that it is legally binding for governments. For example, the trade deal announced with the UK in May includes language on the first page, “Both the United States and the United Kingdom recognize that this document does not constitute a legally binding agreement.”
- Is there a clearly spelled out dispute resolution mechanism if either party violates the agreement? Handling disagreements about implementation is essential for any trade agreement. There will most likely be disputes about whether one country is following what was agreed to and there needs to be a clear and fair tool to resolve those disputes. Without a dispute resolution tool, the agreement is significantly more vulnerable to coming apart quickly.
- Does the deal include vague promises of future purchases or investments? The Trump administration’s trade deals are unusual in that they often include promises of future purchases or investments in U.S. businesses. Purchase commitments can be difficult to enforce (see China Phase One deal), because purchasing is usually done by the private sector pursuing the lowest price for comparable goods. Similarly challenging to enforce are vaguely worded foreign investment promises, as seen in the announced deal with Japan. Typically, governments are focused on setting rules for trade over the long-term, providing a predictable playing field, as opposed to specific, short-term purchases or investments.
- What role is Congress playing? Ultimately, Congress needs to play a role in new trade deals, including basic notification requirements. If the agreement involves changes to U.S. law, then Congress will have to approve the final trade agreement. The traditional involvement of Congress in trade deals is being upended by the Trump administration who is negotiating dozens of deals at once and largely leaving Congress on the sidelines. Many of the deals the Trump administration is negotiating primarily involve tariffs and executive branch actions, so the administration claims it can finalize agreements without a Congressional vote. However, Congress still oversees taxes and could intervene to reform some of the deals and administration’s actions on tariffs. For example, last month the Senate voted to end the Trump administration’s newly assigned tariffs on Brazil and Canada (the House is unlikely to bring this issue to a vote).
The China deal announced this month doesn’t follow any of these basics on trade deal transparency, leaving major questions still on the table. The Trump administration’s erratic use of tariffs, including threatening to increase tariffs on China by 100% just a few weeks ago, has raised questions about whether any of the announced deals are long-lasting. The follow-up on several publicly announced deals by the administration has led to more confusion. The announced EU trade deal still faces major questions and has yet to be approved by the EU Parliament. The EU Parliament is debating how to protect itself from future tariffs from the U.S. if the Trump administration backtracks. Publicly announced trade deals with Japan and South Korea have later revealed unresolved contentious issues that are core to the deal.
Further complicating matters is a major Supreme Court case challenging the Trump administration’s imposition of tariffs under the International Economic Emergency Powers Act (IEEPA), which allows the President to impose sanctions during a national emergency. At the case’s hearing, Supreme Court justices expressed deep skepticism that IEEPA allowed the President such broad authority (see the Roosevelt Institute’s backgrounder on the Supreme Court case). If the tariffs are struck down (a decision is expected in the next few months), the Trump administration would have to refund at least a portion of the money collected from U.S. companies under IEEPA tariffs. Such a decision would slow down Trump’s tariff-led trade policy but not stop it. The administration could still justify tariffs under unfair trading practices or national security grounds — but the process of implementing those tariffs would take weeks and potentially months, not hours.
While the Trump administration has upended the process of finalizing traditional trade agreements, that doesn’t mean previous trade agreements were open and transparent. IATP and other civil society groups have warned for decades, including with the Biden administration, about the secretive nature of trade negotiations and the often exclusive access that powerful interests, including global agribusiness, have in shaping the text. This exclusive process has resulted in corporate-friendly outcomes and has played a role in the current backlash against past free trade agreements like the North American Free Trade Agreement and the World Trade Organization.
Following the China deal, President Trump posted on Truth Social, “Our Farmers will be very happy! In fact, as I said once before during my first Administration, Farmers should immediately go out and buy more land and larger tractors.” But even in the most rosy scenario, the China deal doesn’t help farmers with rising costs for inputs and machinery tied to U.S. tariffs, nor with ongoing market losses. A recent agriculture lender survey concluded that less than half of farmers are expected to be profitable in 2026. Unfortunately, a China deal with many details still unclear adds more uncertainty for farmers as we head into 2026.
