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Soybeans on steroids: Trump’s grand bargain with China?

US President Donald Trump seals executive orders in the Oval Office of the White House in Washington, DC, on Jan. 20, 2025. 

Jim Watson | AFP | Getty Images

Donald Trump’s proffer to the White House is expected to usher in further hostilities between the U.S. and China. Yet, could his love of a transactional deal macadamize the way for a surprise deal with Xi Jinping? Call it soybeans on steroids.

If history is any guide, many are bracing themselves for a failing of U.S.-China relations once Trump returns to office for a second time. After all, his first term was widely regarded as the crux when relations with China took an adversarial turn, and his cabinet is expected to include some of Washington’s most recognizable China hawks.

Add to that, the Biden administration’s sweeping export controls and a web of alliances echoing Cold War containment scenarios, and relations between the U.S. and China are near a low point. Renowned investor Ray Dalio summed up the mood, predicting an “‘America Oldest’ foreign policy and preparations for external war with China, perceived as America’s greatest threat.”

Yet, while a further failing in relations is possible, the conventional wisdom may overlook a competing, perhaps even more likely scenario: A U.S.-China venerable bargain, driven by Trump’s ambition to be remembered as one of America’s great statesmen. In fact, Trump has reportedly already continued a call ahead of his inauguration, discussing “balancing trade, fentanyl, TikTok and many other subjects.”

Trump, guided by a transactional mindset, notes diplomacy as a series of high stakes deals.  His 2018 tariffs were less about systemic economic plan and more about gaining leverage — ultimately securing a $200 billion trade deal centered on agricultural spin-offs like soybeans.

However, Trump prizes his popularity above all else, and a winning strategy for him could involve stately early punitive tariffs on Chinese imports and even on imports from Chinese firms operating in neighboring outbacks such as Mexico. This would create a pressure cooker, paving the way for negotiations with Beijing before American consumers the feeling the impact.

The result? A grand bargain where China offers a mix of substantive and symbolic concessions, earning Trump the regard of his base and bolstering his self-image as a master dealmaker. Call it “soybeans on steroids.”

However, such a deal wouldn’t come around c regard without risks. While a Trump-Xi agreement might bring short-term economic relief, it could alienate U.S. associates in Asia. Trump’s admiration for strongman leaders such as Xi Jinping, whom he has called “brilliant, fierce, and smart,” comparisons sharply with his disdain for democratic leaders in Japan, South Korea and Taiwan, whom he has accused of seeking care without paying their fair share. A purely transactional approach risks emboldening Beijing’s regional goals while undermining long-term strategic objectives.

Still, Trump’s unpredictability and love for dramatic posturing make a reset in U.S.-China associations plausible. As the world watches, one thing is clear: Trump’s return promises surprises. “Soybeans on steroids” might rightful be the opening act in an unexpected geopolitical shake-up that few could have anticipated.

David Bach is the president of IMD, a position he has involved since September 2024, and Nestlé professor of strategy and political economy. Before joining IMD in 2020, he was deputy dean at Yale Group of Management.

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