By Reshma Kapadia

Signs are already pointing to the shakiness of the trade detente President Donald Trump and Chinese leader Xi Jinping struck in late October.

Both rivals are intensifying their efforts to reduce their vulnerabilities, and there are indications that some commitments under the deal might not be fulfilled. China, for example, has bought just a tiny share of the soybeans the U.S. says it had agreed to purchase by January.

"It's too early to be hitting the panic button yet," says Daniel Kritenbrink, a partner at the consultancy The Asia Group and previously the assistant secretary of state for East Asian and Pacific Affairs. He noted that both sides have shown a willingness to inflict pain, a reason for each to avoid taking steps that could provoke too dramatic a response.

At the same time, both sides may be hesitant to push too aggressively given the weakness of China's economy and the potential for a setback for the Trump administration in next fall's midterm elections. That has been enough to keep the deal from going off the rails already.

"But we also have to watch implementation closely," Kritenbrink says. "It's always been implementation that caused challenges and flare-ups over the past year."

Based on Department of Agriculture data released on Friday, China has bought 332,000 metric tons of soybeans from the U.S. since late October, just under 3% of what Washington said it pledged to buy by January. Beijing's resuming purchases after halting them amid the trans-Pacific trade battle was a major part of the deal.

Rural bankruptcies have been rising and U.S. farmers have been caught in the middle of the trade spat. A spokesman for the Chinese embassy in the U.S. didn't immediately respond to a request for comment.

Neither side is sitting still -- and the steps they are taking to shore up their longer-term resilience will likely provide tinder for flare-ups.

For example, while China agreed to pause an expansion of export controls on rare earths, the Chinese Ministry of Commerce is hiring at its fastest rate since 2002 for those in charge of enforcing and policing these restrictions, says Jack Burnham, a China analyst at the Foundation for Defense of Democracies.

The U.S. is moving rapidly as well. Washington has signed rare-earth deals with Malaysia and Australia, is taking stakes in rare-mineral companies such as MP Materials, and is looking for alternative options.

Companies are taking their own steps. Tesla, for example, is requiring its suppliers to not use Chinese parts. At a Council on Foreign Relations event last week, Lockheed Chief Executive James Taiclet outlined the complications companies are facing as they comb through six or seven layers of supply chains to locate vulnerabilities such as a small but critical magnet sourced from China.

"Economic security and national security are intertwined," Taiclet said.

A task force including Taiclet -- it was co-chaired by Commerce Secretary Gina Raimondo and Justin Muzinich, who served as deputy Treasury secretary in the first Trump term -- issued a blueprint for the U.S. to bolster its economic security.

The challenge is significant. Over the past decade, Beijing has spent $900 billion on three sectors the task force described as critical for national security over the next decade: AI, quantum computing and biotech. That is triple the amount the U.S. has laid out.

Currently, the U.S. relies on China for 99% of its heavy rare earths, China controls 80% of the basic ingredients needed for antibiotics and fever reducers, and 80% of U.S. biotech companies have at least one contract with a Chinese supplier. Plus, China is the single supplier for various equipment for quantum computing, including laser diodes, mirrors, and amplifiers.

Raimondo called the situation far from hopeless, noting that there is bipartisan recognition of the problem and that the U.S. has an advantage in its deep capital markets and private sector. But Muzinich and others noted that making changes to bolster national security will come with some costs.

As a result, the group argued, more government action is needed. The task force recommended a new "economic security center" housed in the Commerce Department to bolster government coordination, technical expertise, and private-sector partnerships.

The new awareness is the latest indication that the detente has largely glossed over a rivalry between the U.S. and China that is only beginning. It is likely to be a continual fixture of volatility for companies -- and markets.

Leland Miller, co-founder of independent research firm China Beige Book, cautions against investors treating the detente as a completed one-year deal. Many of the details have yet to be hashed out.

"China assumes they have mutually assured destruction now. They feel they have a formula for stopping Trump leverage," Miller says. "They will fight tooth and nail over everything."

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

November 17, 2025 17:31 ET (22:31 GMT)

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