US and China agree to tariff reductions on agricultural products

The US and China have reached an agreement in principle to pursue reciprocal tariff reductions on agricultural goods, following direct talks between President Donald Trump and Chinese President Xi Jinping.

The framework includes China committing to spend at least $17 billion annually on US agricultural products through 2028, alongside a separate pledge to purchase 25 million metric tons of US soybeans per year from 2026 through 2028.

How bad did it get

To understand why this matters, you need a number: 7.4 million metric tons.

That is how many metric tons of US soybeans China actually imported in 2025, down more than 70% from 2024 levels. At their peak, US tariffs on Chinese goods hit 145%, with China retaliating at 125% on American imports.

US agricultural exporters absorbed roughly $15 billion in losses as a direct result of those retaliatory tariffs.

November 2025 marked the first pivot. A bilateral deal suspended China’s retaliatory tariffs on a range of US farm products, including soybeans, pork, and corn. China also committed to buying 12 million metric tons of US soybeans in the back half of 2025. Actual shipments, though, fell short of what was pledged.

What the new deal actually includes

The May 2026 framework goes further, at least on paper. Both governments indicated they would pursue reciprocal tariff reductions and work to eliminate non-tariff barriers, with the total value of the agricultural trade package framed as exceeding $30 billion.

The $17 billion annual floor covers US farm goods broadly, separate from the soybean volume commitments.

There is a catch, and it is a meaningful one. China has maintained a supplemental 10% tariff on US soybeans even within this framework. That surcharge compounds against whatever base tariffs remain, and it directly affects pricing competitiveness against Brazil, which has steadily expanded its soybean production and shipping capacity to fill the gap left by US exporters during the trade war years.

What investors should watch

For commodity traders and agricultural investors, the agreement introduces a cleaner baseline but not a risk-free one. Purchase commitments from China have a history of being aspirational. The 12 MMT pledge from late 2025 already saw shortfalls in actual delivery, which means the 25 MMT annual target carries a credibility discount until shipment data confirms otherwise.

Soybean futures are the most direct instrument to watch. Any visible acceleration in Chinese purchase orders, verified through US Department of Agriculture export inspection data, would provide real confirmation that the framework is translating into physical trade flows.

The broader agricultural commodity complex, including corn and pork, also stands to benefit if implementation holds. China’s suspension of retaliatory tariffs on those categories as part of the November 2025 deal theoretically reopens market access that had been effectively closed during peak trade-war conditions.

The $17 billion annual floor, if honored, provides a demand backstop that supports pricing across multiple crop categories. The risk is that the gap between what was signed and what gets shipped ends up looking like the late-2025 experience all over again.

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