U.S. President Donald Trump and Chinese President Xi Jinping are scheduled to meet in Shenzhen next week. Experts anticipate that the discussions will center on potential tariff reductions, additional agricultural purchases, and the status of critical minerals. While a positive outcome from the summit would likely boost the stock market and reflect the influence of both governments in shaping trade, the narrative of easing tensions often obscures the reality of how these developments affect individual companies.
The current trade landscape is increasingly defined by government intervention, which dictates who can participate in the market. New policies may induce Chinese state-owned enterprises to place large orders, even as private buyers continue to source goods elsewhere. Furthermore, while export restrictions may be officially relaxed, businesses often struggle to obtain the necessary licenses or find willing suppliers. Companies that possess the regulatory expertise and resources to navigate this complex environment may retain market access that remains difficult for others to secure.
The aftermath of the October 2025 trade truce serves as a case study for these dynamics. By late January 2026, Chinese state-owned firms Sinograin and COFCO had purchased 12 million metric tons of U.S. soybeans. Although this provided benefits to American farmers, private Chinese processors continued to source from Brazil, where lower margins existed due to tariff rate differences. This indicated that ordinary commercial demand had not fully recovered. Similarly, after China paused export restrictions on critical minerals following the October 2025 negotiations, the results were mixed. Exports of rare earth compounds to the United States and Japan declined by 58 percent in the ten months following the agreement compared to the ten months prior, while exports to the rest of the world increased by 146 percent. This shift may reflect fears among Chinese suppliers regarding potential regulatory or political repercussions for trading with the United States.
The costs of trade volatility are significant. Researchers at the Federal Reserve Bank of Atlanta found that during the first Trump term, finding replacement foreign suppliers cost the average importer an equivalent of 5 percent of annual sales. Furthermore, establishing new supplier relationships took more than two-and-a-half years on average. These indirect costs, such as qualifying new suppliers or moving production, can be prohibitive for companies that cannot afford them, potentially leading to lost contracts or withdrawal from the market. Even after restrictions are lifted, businesses may not return to previous relationships, having already invested considerable time and money in new ones.
For decades, companies were incentivized by costs and benefits to determine their own trade strategies. However, in the past eight years, export controls, investment restrictions, tariffs, and government purchasing commitments have increasingly influenced which transactions are possible. While negotiations between the United States and China can produce valuable results, such as lower tariffs or clearer procedures, these agreements should not be judged solely at face value. A deeper analysis is required to determine if private buyers are returning alongside state-owned purchasers, the number of firms participating in bilateral trade, and whether approved licenses result in actual deliveries. The true test of a Trump-Xi agreement will be whether businesses can compete for and participate in trade on workable commercial terms.
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If commercial opportunities are dependent on a changing regulatory landscape, an apparent recovery in China-U.S. trade numbers might conceal reduced economic participation. Therefore, the real test of a Trump-Xi agreement will be not only how much trade it restores, but whether businesses can compete for and participate in that trade on workable commercial terms.
