Newton: China’s ‘Phase Two’ Trade Deal Signals Major Boost for U.S. Farm Exports

Shutdown breakthrough nears as lawmakers edge toward bipartisan deal 

Link: Updates, Nov. 3, 2025: Reviewing Chinese Purchases of U.S. Soybeans 
         in Nov.-Dec. Period
Link: Video: Wiesemeyer’s Perspectives, Oct. 31
Link: Audio: Wiesemeyer’s Perspectives, Oct. 31

More Updates:
 

TRADE & AGRICULTURE
— China’s ‘Phase Two’ trade deal signals major boost for U.S. farm exports
— Carney: Canada can’t get China tariffs lifted right away
— Spain’s olive growers push Brussels to retaliate after WTO 
     clears EU countermeasures
— Argentina’s farm export windfall fades after one-month surge
 

U.S. POLITICS & ECONOMY
— Shutdown breakthrough nears as lawmakers edge toward bipartisan deal
— Markets defy Powell’s warning as rate-cut bets surge
— EPA’s RFS decision delayed as Small Refinery Exemption plan awaits final rule
 

GLOBAL DIPLOMACY & ENERGY
— China hails Xi/Trump summit as ‘historic moment’ marking new phase in bilateral ties
— North American divergence: Why Canada and Mexico are reacting very differently
     to U.S. tariff pressure
— Perspective: OPEC+ pauses oil output hikes amid mounting global surplus

Updates: Policy/News/Markets, Nov. 3, 2025, Part 2

UP FRONT— China’s ‘Phase Two’ trade deal signals major boost for U.S. farm exports President Trump’s new trade framework with China includes commitments for at least 12 MMT of U.S. soybeans by year-end 2025 and 25 MMT annually through 2028, plus renewed access for U.S. sorghum and hardwood logs. Farm Bureau’s John Newton calls the goals “lofty but achievable” if both sides follow through.— Shutdown breakthrough nears as lawmakers edge toward bipartisan deal The 34-day government shutdown may soon end as Senate leaders report progress on a compromise tied to ACA/ObamaCare subsidies and spending priorities, even as SNAP funds dwindle and travel delays worsen.— Xi/Trump summit hailed as ‘historic moment’ for U.S./China ties China’s Foreign Minister Wang Yi praised last week’s Busan meeting as a turning point, noting a truce on soybeans, rare earths, and fentanyl and announcing Shenzhen as host of the 2026 APEC summit.— North American divergence under U.S. tariff pressure The FT reports Mexico’s manufacturing base is weathering Trump-era tariffs far better than Canada’s auto- and energy-dependent economy, deepening recession fears north of the border as the Supreme Court weighs the legality of Trump’s trade powers.— Carney: Canada can’t get China tariffs lifted right away Prime Minister Mark Carney said canola exporters shouldn’t expect quick relief despite renewed talks with Xi Jinping, warning tariff easing will be gradual as Ottawa balances trade diversification with fiscal restraint.— Markets defy Powell’s warning as rate-cut bets surge Despite Fed Chair Jay Powell’s caution, traders price in a 70% chance of a December cut as Trump officials press for easing amid shutdown-related data gaps and tariff-driven inflation uncertainty.— EPA’s RFS decision delayed amid Small Refinery Exemption plan EPA missed its Oct. 31 deadline for final 2027 RVOs after closing comments on reallocating SRE obligations. The rule now hinges on shutdown-delayed regulatory clearance but could still take effect before 2026 ends.— OPEC+ pauses output hikes as global oil glut looms After seven months of supply boosts, producers will halt increases early 2026 amid swelling inventories and falling prices, reflecting concern that another slump could strain national budgets.— Argentina’s farm export windfall fades after one-month surge October exports plunged 80% as Argentina’s September tax holiday front-loaded sales of soymeal, oil, and corn, leaving little momentum for year-end foreign-exchange inflows.— Spain’s olive growers press EU for swift retaliation over U.S. duties After a WTO ruling authorized $13.6 million in EU tariffs, Spanish exporters demand action against Washington’s ripe-olive duties; the USTR says the award “does not alter” U.S. countervailing measures._____________________________________ — China’s ‘Phase Two’ trade deal signals major boost for U.S. farm exportsJohn Newton of the American Farm Bureau Federation says new soybean and ag commitments could rekindle rural growth if both sides follow through In a detailed Market Intel report (link), John Newton, Ph.D., Vice President of Public Policy and Economic Analysis for the American Farm Bureau Federation, outlined the broad scope of President Trump’s newly announced Deal on Economic and Trade Relations with China — a long-awaited “Phase Two” framework aimed at restoring U.S. agricultural exports and rebalancing trade relations. Key agricultural commitments. Newton summarized that the agreement covers fentanyl precursor controls, removal of Chinese export restrictions on rare earths, an end to retaliation against U.S. semiconductor and industrial firms, and — most notably for the farm sector — new agricultural purchase commitments. “The agricultural-related provisions are reminiscent of the 2020 Phase One deal with China,” Newton wrote, “which resulted in more than $60 billion in agricultural exports over the first two years.”  Under the Phase Two accord, China will purchase at least 12 million metric tons (MMT) of U.S. soybeans during November and December 2025, followed by a minimum of 25 MMT annually from 2026 through 2028. The deal also reopens Chinese markets for U.S. sorghum and hardwood logs, with quantities yet to be disclosed. Newton called these goals “lofty but achievable,” noting that the 12 MMT year-end target would mark the fourth-highest two-month export volume in history. He added that the 25 MMT annual commitment represents a “minimum, not a maximum,” potentially translating to about $32 billion in receipts for farmers at $10 per bushel.  Historical context: From Phase One to the present. The report traced the trajectory of U.S./China farm trade since the early 2000s. U.S. agricultural exports to China surged from $2.6 billion in 2000 to a record $28.7 billion in 2012, before collapsing to $14 billion in 2019 during trade tensions. To cushion the blow, the Trump administration disbursed $23 billion in aid to farmers and ranchers.During the Phase One period, exports rebounded sharply — $24 billion in 2020, $39 billion in 2021, and $41 billion in 2022 — fueling record U.S. crop cash receipts and net farm income. But momentum faded as Beijing diversified suppliers, with exports sliding to $32 billion in 2023 and $27 billion in 2024. Year-to-date 2025 exports stand at $14 billion, a figure Newton expects to rise “as China follows through on new purchase commitments.”  Broader economic implications. Newton stressed that China remains the “800-pound gorilla in the room” for global agriculture, and that consistent implementation will determine whether farm income rebounds across rural America. “Their participation, or lack thereof, ripples across the farm economy,” he wrote. “Whether that hope becomes reality will depend on consistent follow-through by both parties and a geopolitical and market environment that allows the deal to endure.” While Phase Two may not be a “cure-all,” Newton argued, it sets the stage for renewed optimism in the countryside — where export strength still determines whether small towns “grow or fade.” — Shutdown breakthrough nears as lawmakers edge toward bipartisan dealTalks intensify as record length shutdown looms and critical programs strain under funding lapse After 34 days of a federal government shutdown, momentum is finally building toward a possible resolution. Senate Majority Leader John Thune (R-S.D.) said last week that bipartisan talks have “ticked up significantly,” even as senators left Washington for the weekend. If no deal is reached by Wednesday, the shutdown will become the longest in U.S. history. The standoff remains rooted in a clash over healthcare and spending priorities. Democrats are demanding that any funding bill include an extension of Affordable Care Act (ACA/ObamaCare) plan subsidies, while Republicans insist the government must reopen before policy negotiations continue. The shutdown’s toll continues to deepen. Saturday marked the first day of ACA open enrollment in most states, even as funding for the Supplemental Nutrition Assistance Program (SNAP) expired — jeopardizing benefits for 42 million Americans. Two federal judges ordered the continuation of payments using contingency funds, but officials warned that those reserves are limited. Transportation Secretary Sean Duffy said unpaid federal workers, including air-traffic controllers, are reaching a breaking point. More than 9,000 flight delays were reported over the weekend, and Duffy warned that “delays are just going to worsen without a resolution.” A bipartisan group of centrist Democrats and Republicans has floated the idea of coupling a short-term continuing resolution with longer-term spending bills to fund select agencies. But Thune cautioned that “full-year discussions can’t happen while the government is closed.” — China hails Xi/Trump summit as ‘historic moment’ marking a new phase in bilateral tiesForeign Minister Wang Yi says talks in South Korea ease tensions and signal a more stable era ahead of next year’s APEC in Shenzhen China’s top diplomat, Foreign Minister Wang Yi, called last week’s meeting between President Xi Jinping and President Donald Trump “a historic moment” that will help reduce misunderstanding and prevent major fluctuations in relations between the two powers. According to a Chinese foreign ministry statement, Wang said the Busan summit was “a landmark event in international affairs,” marking a positive turning point in China/U.S. engagement after months of tension. He noted that the meeting — the first in-person encounter since Trump’s return to the White House in January — showcased the personal rapport between the two leaders and produced a truce on contentious issues including soybeans, rare earths, and fentanyl. “Many believe the meeting marks the start of a more stable and manageable period in bilateral relations,” Wang said, adding that the restoration of economic dialogue “has boosted global market confidence.” He underscored Xi’s three guiding principles for Washington: mutual respect, peaceful coexistence, and win-win cooperation. Wang also confirmed that Shenzhen, the southern tech hub that symbolizes China’s reform and opening-up, will host the 2026 APEC summit — the third time China has hosted the forum and the first in 12 years. “Shenzhen is ready to present a spectacular event to the world,” he said. Trump told reporters both sides agreed on reciprocal visits in 2026, with his trip to China expected in April and Xi’s visit to the U.S. to follow. Beijing’s official release echoed this, describing the talks as paving the way for “stable, healthy, and sustainable” development of bilateral relations and hinting at regular high-level exchanges in the coming year. — North American divergence: Why Canada and Mexico are reacting very differently to U.S. tariff pressureWhile both neighbors are hit by Donald Trump’s tariffs, Mexico leans into labor cost arbitrage and export growth hopes — Canada braces for auto‑sector shock and supply chain retrenchment. Different approaches. The Financial Times reports that Mexico and Canada, both targeted by President Donald Trump’s sweeping tariff measures, are facing sharply contrasting economic outcomes. Mexico’s industrial hubs, particularly Monterrey, are proving relatively resilient as U.S. manufacturers continue to rely on cross-border supply chains. This reliance has shielded Mexico from the full brunt of 25% tariffs on its exports, according to the FT.  Canada, however, is absorbing a deeper shock. Its economy is more tightly bound to U.S. supply chains, especially in automobiles, energy, and lumber. The result has been a noticeable downgrade in export growth projections and growing recession fears if the tariff regime continues. Analysts note that while both economies are exposed to U.S. trade policy, structural differences explain their divergent fortunes. Mexico’s competitive labor costs and nearshoring opportunities are cushioning the blow, whereas Canada’s higher production costs and reliance on integrated industries make it more vulnerable to tariff disruptions. Diplomatically, Mexico appears more willing to cooperate with Washington to maintain factory linkages, while Ottawa faces pressure to defend domestic industries. The United States–Mexico–Canada Agreement (USMCA) provides limited carve‑outs, but both governments are navigating the fallout cautiously. Meanwhile, the Trump administration faces a high‑stakes legal challenge to its use of the International Emergency Economic Powers Act (IEEPA) to impose global tariffs. If the Supreme Court strikes down that authority, trade officials are expected to pivot swiftly to other legal tools such as Section 301 (targeting unfair practices) and Section 232 (national security grounds).  These narrower instruments would allow continued tariff leverage but with tighter legal justification. The FT notes that even if the legal foundation for the tariffs collapses, Washington’s broader protectionist strategy will endure — reshaping North American trade, investment flows, and inflation dynamics. For Canada and Mexico alike, the next phase of this tariff saga could redefine their economic relationship with the U.S. for years to come.  Comparative Impact of U.S. Tariffs on Canada and MexicoCountryExposure & ResponseKey RisksKey Opportunities / BufferMexicoExport‑oriented manufacturing; strong links to U.S. auto & electronics sectors.Up to 13% manufacturing decline and >35% export fall in worst‑case scenarios.Low cost base; U.S. nearshoring potential; ongoing industrial resilience.CanadaHighly trade‑dependent with tight U.S. supply‑chain integration in autos, energy, lumber.Up to 28% export decline; supply‑chain disruption; rising recession risk.Strong institutions; potential USMCA carve‑outs; opportunity to renegotiate trade terms. — Carney: Canada can’t get China tariffs lifted right awayPrime Minister acknowledges slow path ahead for canola trade revival amid tariff standoff with Beijing Canadian Prime Minister Mark Carney tempered expectations that Chinese tariffs on key Canadian exports — including canola — would be lifted quickly following his high-level meeting with President Xi Jinping in South Korea. Speaking to reporters after the first formal Canada/China bilateral talks since 2017, Carney said that while the meeting succeeded in “re-establishing a relationship at the highest level,” immediate relief for exporters wasn’t realistic. “People sometimes simplify it down, to give this for that,” Carney said. “That’s not the way it works.” Carney confirmed he had accepted Xi’s invitation to visit China “in the new year,” but warned that progress on tariffs and travel restrictions would take time. China imposed levies on a range of Canadian food products, notably canola, after Ottawa enacted steep tariffs on Chinese electric vehicles, steel, and aluminum last year under former Prime Minister Justin Trudeau. The canola dispute has been a major drag on Canada’s farm sector, which relies heavily on Asian markets for export growth. Carney has made trade diversification a central goal of his premiership, seeking to reduce the country’s dependence on the United States — which still accounts for about 75% of Canada’s exports. He has pledged to double non-U.S. exports within a decade, citing an ambition to add C$300 billion ($214 billion) in trade. Boosting business with Asia’s largest economies, Carney said, will require both diplomatic persistence and domestic reforms, including relaxing rules that restrict oil tankers along parts of British Columbia’s coast. He also signaled fiscal restraint ahead of next week’s budget rollout by Finance Minister François-Philippe Champagne, saying the government would need to cut some spending to fund “massive investments” in housing, ports, and energy infrastructure. Carney noted that future commercial opportunities with China could focus on less sensitive areas — such as consumer brands like Lululemon and Canada Goose — while investment limits would likely remain for strategic sectors like cybersecurity and clean energy technology. Despite uncertainty over tariff negotiations, Carney said he sees room for cooperation in the clean energy sector, pointing to China’s global leadership in offshore wind and battery storage. “It’s a natural potential area for cooperation even before you get to EVs,” he said. Of note: In his meeting with Carney, Xi said China/Canada ties are “beginning to recover and improve,” with scope to expand practical cooperation across the economy, trade, and energy. Canada called the meeting a “turning point,” and said the two discussed solutions to multiple trade irritants, notably canola, seafood, and electric vehicles (Prime Minister of Canada’s Office). Bottom Line: For now, Canada’s canola exporters and other ag sectors will have to wait — a reflection of what Carney described as a “careful” approach to rebuilding ties with Beijing. — Markets defy Powell’s warning as rate-cut bets surgeTrump economic team pressures Fed as tariffs and shutdown complicate policy outlook Traders are brushing off Federal Reserve Chair Jay Powell’s latest warning that another rate cut this year isn’t guaranteed. Futures markets now price in nearly a 70% chance of a quarter-point reduction at the Fed’s December meeting. Adding to the pressure, several senior Trump administration figures are publicly urging the central bank to ease policy. Treasury Secretary Scott Bessent told CNN’s Jake Tapper that while the overall economy was “in good shape,” some sectors were already “in recession” due to high borrowing costs. That view is shared by Fed Governor Stephen Miran, a former White House economic adviser, who told the New York Times that keeping monetary policy “this tight for a long period of time” risks “inducing a recession.” Miran dissented at last week’s Fed meeting, favoring a half-point rate cut. Powell, however, insists the economy remains resilient, supported by consumer spending, even as inflation stays above target and the labor market cools. But he acknowledged that “strongly differing views” within the Fed meant another cut was “not a foregone conclusion.” The shutdown-driven data blackout has further muddied the policy picture, depriving Fed officials of key economic readings. Meanwhile, analysts warn that Trump’s trade and immigration measures may sustain “sticky inflation.” Berenberg’s Holger Schmieding said those policies give the Fed “limited room to cut rates.” Miran rejects that notion, countering that inflation risks are “to the downside.” Of note: Amid the uncertainty, bond traders are skittish: the 10-year Treasury yield has jumped to about 4.1% as markets brace for the Fed’s next move. — EPA’s RFS decision delayed as Small Refinery Exemption (SRE) plan awaits final rulePublic comment period closes on reallocation proposal, pushing back finalization of 2026–27 Renewable Volume Obligations (RVOs) The Environmental Protection Agency’s timeline for finalizing the next phase of Renewable Fuel Standard (RFS) requirements has slipped again following the close of public comments on its proposed plan to reallocate blending obligations from small refinery exemptions (SREs). Oct. 31 marked the end of the comment period on the proposal — and the legal deadline for finalizing the 2027 Renewable Volume Obligations (RVOs), which must be completed 14 months before taking effect. EPA had originally signaled it would meet that schedule but acknowledged in its announcement that the target was no longer feasible. The proposed rule aims to reassign renewable fuel blending requirements previously waived for certain small refineries, a move expected to have direct implications for the 2026 and 2027 RVOs. Industry stakeholders are now waiting to see how swiftly EPA can move toward a final rule amid a broader slowdown in regulatory actions caused by the ongoing government shutdown. Despite the delays, the RFS reallocation remains among the actions expected to advance through the clearance process in the coming months, with final implementation still anticipated before the end of 2026. — Perspective: OPEC+ pauses oil output hikes amid mounting global surplusProducers curb ambitions after months of supply boosts as crude prices fall and inventories swell OPEC+ signaled a strategic retreat from its recent push for greater market share, deciding Sunday to halt production hikes after one final, modest increase in December. For seven months, Saudi Arabia and its partners had ramped up output to reclaim sales lost to U.S. shale producers and other rivals. The alliance cited “seasonality” for the pause — the typical post-winter drop in fuel demand — but analysts say deeper pressures are at play. The International Energy Agency projects a record oil glut early next year as new supply from the Americas floods the market, potentially driving crude below the current $65 a barrel, already well under what many OPEC+ nations need to fund spending. With more than 1 billion barrels now idling on tankers, signs of oversupply are already evident. The decision to pause was broadly supported by members, reflecting growing concern that another price slump could strain budgets. OPEC+’s restraint may also be politically driven some analysts note. Russia, a key member facing new U.S. sanctions under President Donald Trump’s efforts to end the Ukraine war, is struggling to sustain higher output. That reality may have nudged the group toward its “pause.” The move recalls Saudi Arabia’s failed market-share gamble a decade ago, when a similar strategy collapsed under the weight of low prices. Whether this latest adjustment remains temporary or evolves into deeper cuts will depend on how quickly the expected glut materializes in early 2026. — Argentina’s farm export windfall fades after one-month surgeOctober collapse follows September’s tax-driven export rush Argentina’s agricultural export revenues plunged in October following a brief windfall the previous month. According to the CIARA-CEC grains processors and exporters’ chamber, export receipts totaled just $1.12 billion in October — an 80% drop from September and 56% below October 2024 levels. The sharp decline reflects a front-loading of sales after the government temporarily suspended export taxes on grains and by-products in September. That policy fueled a surge of soybean meal, oil, and corn shipments as exporters rushed to take advantage of the short-term tax reprieve. CIARA-CEC noted that October’s downturn was expected, as much of the available volume had already been committed during the September export wave. The pullback underscores Argentina’s continuing struggle to generate steady foreign exchange inflows amid persistent inflation, capital controls, and tightening farm margins ahead of next season’s harvest. Economists warn that while the September tax holiday provided a one-time boost, it left little momentum for the final quarter of the year unless new policy incentives emerge. — Spain’s olive growers push Brussels to retaliate after WTO clears EU countermeasuresEU authorized to impose $13.6 million in tariffs after Washington refuses to lift duties on ripe olives Spanish table olive producers are urging the European Union to swiftly enact retaliatory tariffs against the United States after the World Trade Organization (WTO) ruled that Brussels may impose up to $13.64 million annually in sanctions over Washington’s duties on ripe olives from Spain. The decision marks the latest chapter in a trade dispute dating back to 2018, when the U.S. imposed anti-dumping and countervailing duties on Spanish black olive exporters, citing unfair subsidies under Spain’s Common Agricultural Policy. The WTO first sided with the EU in 2021, finding that the U.S. method for determining subsidy “pass-through” — the assumption that all farmer subsidies benefit processors — violated global trade rules. A compliance panel reaffirmed that conclusion in February 2024, stating Washington had not fully corrected its methodology. On October 29, 2025, a WTO arbitrator authorized Brussels to retaliate, capping measures at $13.64 million a year — significantly below the $33.5 million the EU had requested. The Spanish Association of Table Olive Exporters (ASEMESA) hailed the ruling as a “vindication” and pressed EU authorities to “act without delay” if Washington refuses to comply. The group says Spanish exports of black olives to the U.S. have plunged by more than half since 2017, dropping from 49% of the U.S. market to just 19%. “These duties have devastated one of Spain’s most export-oriented agri-food sectors,” ASEMESA said in a statement quoted by Reuters. “We now have a legal and moral obligation to defend our producers.” The Office of the U.S. Trade Representative (USTR) countered that the WTO’s decision “does not alter” U.S. anti-dumping and countervailing duties and highlighted that the awarded retaliation amount was “less than half” of what the EU sought. The U.S. maintains the measures are necessary to protect domestic producers against subsidized imports. Next steps for Brussels: While the EU is now authorized to act, any retaliatory tariffs must still undergo internal approval procedures in Brussels. European Commission officials have not indicated which U.S. products might be targeted. Trade analysts say the modest size of the award suggests the EU may seek a negotiated resolution rather than a full-scale tariff response — but Spanish producers are losing patience. The dispute underscores enduring tensions in U.S./EU agricultural trade, especially over subsidy accounting and fair-market pricing. ASEMESA warns that continued inaction will embolden competitors in countries such as Morocco and Egypt, further eroding Spain’s global market share. For Washington, the ruling raises questions about the broader consistency of its agricultural trade enforcement under WTO rules — and whether the Biden-era reforms to Section 771B of the Tariff Act, which underpinned the original duties, might need revisiting.