Treasury Secretary Bessent signaled over the weekend that substantial progress has been made in U.S.–China trade talks, raising hopes that a “short-term” trade framework could be finalized on Thursday when President Trump meets with President Xi.

A key component of the anticipated framework could include China increasing its purchases of U.S. soybeans, a politically sensitive issue domestically. China has not purchased any U.S. soybeans this year, choosing instead to ramp up imports from Argentina and Brazil.

This reduction in U.S. soybean imports isn’t new. Beijing has been slowly reducing its reliance on U.S. agricultural markets since the original trade war during President Trump’s first term. With harvest season in full swing, U.S. farmers are now faced with difficult choices: either pay higher costs to store their crops amid limited storage capacity or sell into a depressed market, further pressuring already tight profit margins.

Another potential development is a one-year delay in China’s planned rare-earth export controls. China currently processes more than 70% of the world’s critical minerals, a key sticking point in trade negotiations. Even the threat of short-term restrictions has already caused disruptions across the U.S. economy, from shortages in key automotive components to delays in aerospace and defense manufacturing. While the U.S. is working to build a domestic critical minerals industry through “strategic” investments and favorable regulatory incentives, it will take time to scale both mining operations and processing capacity the latter being China’s competitive advantage.

Trade talks may also produce an agreement on TikTok’s operational structure. Though seemingly unrelated to core trade issues, this has been a priority for President Trump since the November elections. The proposed “franchising” structure pitched as a “best of both worlds” compromise, appears likely to push the deal over the finish line.

Despite these positive developments, the underlying issues are far from resolved. Key questions remain around U.S. export controls on advanced AI chips and semiconductor manufacturing equipment, as well as broader industrial policies aimed at countering China’s overproduction and price undercutting in consumer goods.

Still, markets are embracing the current reduction in trade tensions. For now, the path of least resistance remains higher, with equities making higher highs and higher lows, at least until the next bump in the road emerges.

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