What It Means: China Suspends Soybean Tariffs Under Trump/Xi Agreement
Beijing lifts retaliatory duties; with market-based exclusion process, both U.S. and Brazilian soybeans now face only China’s standard 13% VAT
The White House’s ‘Rebalancing Trade with China’ fact sheet (link) confirms that China has suspended all retaliatory tariffs imposed since March 4, 2025, including those on U.S. farm commodities such as soybeans, corn, pork, beef, and dairy products. The agreement — reached between Presidents Trump and Xi in South Korea — reopens the Chinese market for American farmers, marking the most significant tariff rollback since the 2020 Phase One accord.
However, the Fact Sheet specifies that the suspension applies only to retaliatory tariffs announced since March 4, 2025. Earlier retaliatory tariffs from 2018 technically remain in China’s tariff schedule (see table below) but are offset by its market-based exclusion process. That process allows Chinese importers to apply for waivers from the 25% tariff — and Beijing’s extension of these waivers through Dec. 31, 2026, means that, in practice, U.S. soybeans now enter China at the same duty rate as Brazilian soybeans.
| As for background on the tariff exclusion process, in August, China’s Ministry of Finance extended to Oct. 30 the tariff exclusion process with all approved exclusions valid through Dec. 13. The U.S. ag attaché in August issued a report which noted, “This policy update appears to apply to all agricultural products from the United States subject to Section 301 retaliatory tariffs, including but not limited to grains, oilseeds, meat, pulses, tree nuts, alcoholic beverages, leather/hides, and fruit. Previously, the application system indicated that no new applications would be accepted after Aug. 1, 2025, and that approved exclusions would only remain valid until Sept. 14, 2025.” It would appear this exclusion process is now extended through Dec. 2026. |
Under the new deal, China pledged to purchase at least 12 million metric tons (MMT) of U.S. soybeans during November and December 2025 and 25 MMT annually through 2028. Beijing will also extend its tariff-exclusion process through Dec. 31, 2026, effectively locking in the suspension period.
The 13% VAT. While China has lifted the recent retaliatory tariffs, imports from all origins — including Brazil — continue to be subject to the standard 13% Value-Added Tax (VAT) on agricultural goods. This VAT is not a retaliatory measure, but part of China’s general consumption tax system applied to both domestic and foreign sellers. That means Brazilian soybeans face the same 13% VAT as U.S. soybeans. The difference lies in the retaliatory duty layer — now waived for U.S. imports through 2026, but still legally on the books.
Before vs. After: U.S. Soybeans in China
| Category | Before Trump–Xi Agreement (Pre-Nov. 2025) | After Trump–Xi Agreement (Effective Nov. 2025) |
| Tariff on U.S. Soybeans | 25% retaliatory tariff (added in July 2018) + ~3% MFN base duty. Effective total tariff burden ~28%, plus VAT. | Retaliatory tariffs imposed since March 4, 2025, suspended under the Oct. 2025 Trump–Xi deal. Earlier 2018 tariffs still exist on paper but are neutralized through the exclusion process, leaving only MFN (~3%) applied. |
| Value-Added Tax (VAT) | 13% VAT applied at import — standard rate for agricultural goods. Also applies to soybeans from Brazil and all other origins. | 13% VAT remains — this is China’s normal consumption tax, equally applied to U.S. and Brazilian soybeans. |
| Market-Based Tariff Exclusion Process | Temporary exclusions granted to select importers on case-by-case basis; uncertain renewals created risk. | China extends the exclusion program and all waivers remain valid until Dec 31, 2026, ensuring that importers continue to bypass the 25% retaliatory tariff. |
| Non-Tariff Measures | Multiple retaliatory actions, unreliable-entity listings, and import licensing frictions. | All retaliatory non-tariff measures suspended under the accord. |
| Purchase Commitments | No binding quotas after Phase One lapsed; Chinese buyers favored Brazil. | 12 MMT of U.S. soybeans in Nov–Dec 2025, plus 25 MMT annually (2026–2028) committed by China. |
| Competitive Impact | U.S. beans often priced out of China due to 25% tariff; Brazil captured >60% of China’s soybean imports. | U.S. beans regain competitiveness with Brazil; price gap now determined by freight, FX, and harvest timing, not tariffs. |
Bottom line: The extension of China’s market-based tariff exclusion process through 2026 is effectively a two-year suspension of the 25% retaliatory tariffs on U.S. soybeans. This restores price parity with Brazilian soybeans, which also face the same 13% VAT but no retaliatory duty. While the exclusions provide breathing room for U.S. exporters, they are administrative and can be reversed quickly if relations sour — giving Beijing both flexibility and leverage.
In practical terms, this move could re-establish U.S. soybeans as a key supplier to Chinese crushers through 2026 and beyond, provided Beijing follows through on its new purchase commitments. With the retaliatory tariff suspended and the extension of China’s market-based tariff exclusion process, and the 13% VAT uniformly applied to all origins, U.S. soybeans are now on equal fiscal footing with Brazil’s in China’s import market. The test will be whether Beijing’s new 25 MMT annual commitment translates into sustained purchases — or remains conditional on price and politics. Trump administration officials within the USTR and USDA and perhaps others will hold regular monitoring sessions to gauge China’s fulfilling its purchase commitments. If not, President Trump has clearly stated new tariffs could be reapplied on China.
