March PMIs: scent of stagflation

Overstated trade deals
The stability of the Sino-US relationship will clearly be centred around trade and access to Chinese markets for US businesses. These were the low-hanging fruit that were easily deliverable from the May summit. 

Following last year’s tit-for-tat trade war, the US and China currently have a truce in place that sees the US impose 20% additional tariffs on imports from China, with a 10% tariff imposed by the Chinese government on US goods flowing in the opposite direction. That truce is set to expire on 01 November. While the readouts from both countries suggested incremental progress had been made on extending that deal, nothing was signed meaning a degree of uncertainty remains. 

China renewed import licences for over 400 US beef plants which had expired over the past year. However, US beef prices have reached record highs this year given supply constraints and Trump is currently considering an executive order to allow the US to import more beef and ease price pressures.³ As such, the US does not have excess supply to export to Chinese markets, meaning the impact of the renewed import licences is likely to be minimal in the short term.

The agricultural deals touted as big wins by the US are also likely overstated. Soybeans are one of the agricultural products that have been most impacted by the US-China trade war. They are also the US’s top agricultural export to China. In Trump’s first term, tariff increases led to China more than halving its imports of soybeans from the US (see Figure 1). A deal eventually saw volumes recover, yet China failed to fulfil the order quantity it legally committed to in order to cool trade tensions.⁴

Export volumes to China collapsed again in 2025 as Trump reignited the trade war. The trade truce in place since October 2025 included a deal for China to buy 25 million metric tons of soybeans from the US each year through 2028. It would be no great surprise to see Beijing fail to fulfil its order commitment again. Thus, while the US is touting a great success now, it will be more pertinent to judge the quality of its agricultural deals at their expiration.

Contrasting geopolitical stances
The key risk for the US-China relationship is the two superpowers’ contrasting geopolitical alignments. The lines that came out of the US camp had notable differences to those that came out of the Chinese camp. On Iran, the US suggested an extensive exchange while China simply urged further diplomacy and confirmed the two countries had exchanged views. This suggests that Trump and Xi were not in agreement about with whom the onus lies to stop the conflict in the Middle East and reopen the Strait of Hormuz.

While Iran was one of the most important issues for Trump, the most critical issue for President Xi was Taiwan. He stated that if handled poorly, the countries could “even clash”.⁵ While Xi aimed to put pressure on the US to change its policy on Taiwan and outwardly oppose its independence, Trump said he refused to comment on the matter. 

A key watchpoint will therefore be the USD 14 billion US arms sale to Taiwan which is waiting for Presidential sign-off before being completed. This would follow the USD 11 billion deal that was approved in December 2025 and would place a strain on the Sino-US relationship. It is likely that Trump is holding off on approving the deal in order to use it as a negotiating chip with Xi. 

Kicking the can down the road
One of the main outcomes of the summit was that Trump invited Xi for a return visit to the White House on 24 September. This helps to explain why there were so few deliverables from the Beijing meetings. Neither leader wishes to play too many of their chips as they seek to incentivise the other to tread carefully on issues important to them. 

In summary, the US-China summit in Beijing was disappointing, offering few breakthroughs on trade or geopolitics. Trump and Xi essentially kicked the can down the road until the September summit in the US. Nonetheless, it is positive that the two rival superpowers who are competing geopolitically, economically, and in the AI race, are talking as this lowers the risk of a miscalculation from either side and helps to manage the relationship.

¹ ‘Y.M.C.A’ became synonymous with Trump, with the President repeatedly dancing to the song at campaign rallies.
² https://www.reuters.com/business/retail-consumer/us-clears-h200-chip-sales-10-china-firms-nvidia-ceo-looks-breakthrough-2026-05-14/
³ https://www.reuters.com/world/asia-pacific/china-renews-expired-export-licenses-us-beef-plants-chinese-customs-website-2026-05-15/
⁴ https://www.piie.com/blogs/trade-and-investment-policy-watch/2021/anatomy-flop-why-trumps-us-china-phase-one-trade-deal
⁵ https://h.xinhuaxmt.com/vh512/share/13101247?docid=13101247&newstype=1001&d=13526a2