Trump-Xi Summit Fails to Yield Breakthrough on Tariffs
The summit between US President Donald Trump and Chinese leader Xi Jinping on May 14-15, 2026, did not lead to any new tariff agreements, according to a recent report by Oxford Economics. Given the lack of a significant breakthrough during Trump’s visit to China, Oxford Economics left its estimate of the effective US tariff rate unchanged at 9.3%.
However, the two countries did agree to establish the US-China Board of Trade, which will manage the trade of non-sensitive goods, such as agriculture and energy. The immediate task of this new body is to devise a US$30 billion package intended to rebalance trade between China and the US. While this package could eventually lead to the lowering of tariffs, a fact sheet released by the White House on May 17 did not explicitly mention any such reduction. Going forward, the China-US trade truce will continue until November, with US tariff rates on Chinese imports slightly above 20%.
US Announces US$17 Billion Chinese Commitment to Purchase Agricultural Products
The Trump-Xi summit in May resulted in China agreeing to purchase at least US$17 billion of US agricultural products per year from 2026 to 2028 (with 2026 prorated), according to Oxford Economics. This agreement would entail an increase from 2025, when the US exported US$8 billion of agricultural goods to China, but would remain well below previous levels. Between 2020 and 2024, China purchased an average of US$28 billion in US agricultural goods per year, accounting for nearly one fifth of all US exports to China.
Notably, the US$17 billion deal does not include China’s previous commitment to purchase 25 million metric tons of US soybeans per year. A White House fact sheet did not specify which products are covered in the agreement, and the Chinese readout did not confirm the US$17 billion figure.
Markets Bet on Rate Hikes as Energy Shock Fuels Inflation Fears
Against the backdrop of the energy price shock triggered by the hostilities in Iran, a recent Oxford Economics report suggests that markets expect to see interest rate hikes across advanced economies in the coming months.
A significant repricing in interest rate markets signals expected rate hikes across the US, the eurozone, Japan and the UK to prevent these rising costs from fueling broader inflation. While some nations, such as Australia, have already begun raising rates, central banks elsewhere are facing a critical dilemma: whether to follow the market’s lead or hold steady to protect economic growth.
The current monetary environment is tighter than it was during previous inflation spikes, with conditions ranging from neutral to restrictive. In the eurozone, credit supply is tightening and loan demand is falling, while in China, a trend of household deleveraging is creating a drag on money and credit growth. Additionally, a recent rise in long-term bond yields is already neutralizing the benefits of previous interest rate cuts, meaning that new hikes today could risk significant output losses and a severe squeeze on corporate finances.
Projections by Oxford Economics suggest a more cautious path than what markets currently expect, with no rate hikes anticipated for the US or UK and a slower pace of increases in the eurozone. However, the “inflation attention” of households and firms remains high, making them sensitive to news and potentially forcing central banks to hike rates simply to maintain their credibility.
US Federal Trade Commission Investigates Rising Fertilizer Prices
On May 28, 2026, the US Federal Trade Commission (FTC) said that it had been investigating fertilizer prices, as reported by Reuters. Speaking at an event with farmers in Texas, FTC Chairman Andrew Ferguson stated: “The commission some time ago commenced a major industry-wide investigation into the precipitous rise of fertilizer prices in this country, which has affected so many of our nation’s farmers.”
The investigation comes amid ongoing shipping disruptions caused by the hostilities in Iran. The Persian Gulf region is a major fertilizer production hub and much of the global fertilizer supply typically passes through the Strait of Hormuz. In testimony before a US Senate agricultural committee in May, a farmers’ group cited data from the American Farm Bureau Federation (AFBF) showing price increases of up to 55% for urea, a major fertilizer produced in the Gulf region. In a nationwide survey conducted by the AFBF in April, 70% of respondents said that prices were so high that they would not be able to buy all the fertilizer they need for this growing season.
