“I want John Deere and Case and all of – they’re great companies, Caterpillar… I want these companies to give it to you in the form of lower tractor and equipment costs,” Trump told hundreds of farmers and ranchers gathered under drizzle at an event on the South Lawn of the White House.

Deere & Co shares dropped two per cent after the statement. Case IH manufacturer CNH Industrial fell one per cent while Caterpillar Inc was down nearly 1.2 per cent in late-session trading.

The three companies could not immediately be reached for comment.

Trump seeks support from struggling farmers

Trump called for lower prices in an aside during a speech that otherwise focused on shoring up support among the Republican president’s loyal constituency of rural voters, who have backed Trump in all three of the last presidential races.

For the fourth straight year, U.S. crop producers are facing tight margins, high production costs and low commodity prices – and are struggling financially – despite near-record government payments.

The Trump administration is distributing $12 billion (C$16.7 billion) in aid to U.S. farmers — a move that farm trade groups and agricultural economists have said is helpful in the short-term but will not fully compensate farmers for financial losses that have topped $30 billion in recent years.

On Friday, Trump said he would seek even more such aid for farmers from Congress. More than 50 farm-interest groups, such as the American Farm Bureau Federation, are urging Congress to approve additional aid in a military funding package.

Trump pledges new loan guarantees

The event happened as the administration finalized new biofuel blending mandates for U.S. oil refiners, requiring them to mix more of the fuels made from corn and other agricultural products into the nation’s gasoline and diesel than initially proposed, in an apparent win for farmers.

Trump also said the U.S. Small Business Administration would open up new loan guarantees for farmers and food suppliers.

Farmers are entering the critical spring planting season under a cloud of uncertainty as the U.S.-Israeli war with Iran disrupts global trade, causing fertilizer and diesel costs to spike.

The long-term U.S. trade relationship with China also remains unclear amid the ongoing trade war launched by Trump’s administration with the country, the world’s top soy importer.

Rural voters constitute a fifth of the U.S. electorate, and they favored Trump by a two-to-one margin over Democrat Kamala Harris in the 2024 presidential election.

— Additional reporting by Bhargav Acharya

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In a goodwill gesture two months before Trump’s expected visit to Beijing, Trump said Xi would consider hiking soybean purchases from the United States to 20 million metric tons in the current season, up from 12 million tons previously. Soybean futures rallied.

Hours after Xi’s virtual meeting with Russian President Vladimir Putin, Xi and Trump discussed Taiwan and a wide range of trade and security issues that remain a source of tension between the world’s two biggest economies. Both leaders publicly affirmed their personal stakes in strong relations after the call, their first since November.

Preserving stability

Trump said on Truth Social that the call was “all very positive,” that his relationship with Xi is “extremely good,” and that “we both realize how important it is to keep it that way.” An official Chinese government account said that Xi had said, “I attach great importance to Sino-U.S. relations.”

Though Trump has tagged China as the reason for several hawkish policy steps from Canada to Greenland and Venezuela, he has eased policy toward Beijing in the past several months in key areas, from tariffs to advanced computer chips and drones.

“Both sides are signalling that they want to preserve stability in the U.S.-China relationship,” said Bonnie Glaser of the German Marshall Fund of the United States, a think tank.

Soybeans a key issue

Economic issues continue to be a flashpoint between the world’s biggest consumer and its biggest factory. Trump has made tariffs on imports a pillar of his strategy to revive domestic manufacturing jobs. U.S. Vice President JD Vance on Wednesday unveiled plans for a preferential trade bloc of allies for critical minerals, part of an effort to eliminate leverage that China has over the United States because of its control of key metals.

The two sides are working to find areas of accord heading into an expected April state visit by Trump to Beijing. Trump and Xi last met in person in October in South Korea, where their current trade truce was struck.

Soybeans are key because struggling U.S. farmers are a major domestic political constituency for Trump, and China is the top consumer. Overseas sales of U.S. soybeans this year slumped to the lowest in 14 years due to trade tensions with China. Benchmark Chicago Board of Trade soybean futures surged more than three per cent to a two-month high.

Demand could outstrip supply

U.S. supplies are not sufficient to export another 8 million tons to China while also meeting expected demand from other importers, said Arlan Suderman, chief commodities economist for StoneX, a consultancy. U.S. soybean prices could rise and some U.S. and international buyers could satisfy demand by buying soybeans from Brazil instead, he said.

China’s commerce ministry did not immediately respond to a Reuters request for comment on the possibility of soybean purchases.

U.S. Representative Ro Khanna, a Democrat who sits on a committee focused on China, criticized Trump’s dealmaking.

“He points to China’s soybean buying as proof of progress, despite volumes still trailing where they stood before he took office,” Khanna said in a statement. “He says nothing about China’s aggression towards Taiwan, support for Putin’s invasion of Ukraine or human rights abuses.”

In addition to soybeans, the U.S. and Chinese leaders discussed Iran, Russia’s war in Ukraine, airplane engines and oil and gas, Trump said.

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For more tariff coverage, visit the Western Producer’s tariff page

U.S. stocks rallied on hopes that the two countries might lower the steep trade barriers they have erected over the past month, though there was no sign that negotiations might start anytime soon.

Soybean futures also jumped, reaching two-month highs by midday Wednesday.

“Some of the bullish undertone behind soybeans is related to easing concerns over the China/U.S. tariff spat, although if any deal gets done, China is already done buying U.S. soybeans,” said Terry Reilly, senior agricultural strategist at Marex.

He added that soybean futures received some support from technical buying.

Tariffs must come down for talks to proceed

Bessent said the tariffs—145 per cent on Chinese products and 125 per cent on U.S. products—would have to come down before trade talks can proceed, but said Trump would not make that move unilaterally.

“Neither side believes that these are sustainable levels. As I said yesterday, this is the equivalent of an embargo and a break between the two countries in trade does not suit anyone’s interest,” Bessent told reporters.

The Wall Street Journal reported that the White House is considering cutting tariff levels to as low as 50 per cent on Chinese imports in a bid to lower tensions. A White House spokesperson dismissed any reports as “pure speculation” and said news on tariffs would come from Trump himself.

“We are going to have a fair deal with China,” Trump told reporters, but did not outline any specifics.

The tariff levels outlined in the Journal report would likely still be high enough to deter a significant chunk of trade between the world’s two largest economies. German shipper Hapag-Lloyd said Wednesday that 30 per cent of its U.S.-bound shipments from China have been cancelled.

Separate talks between the two countries over tackling the fentanyl epidemic have not yielded results so far, sources say.

Bessent said the third quarter of this year is a “reasonable estimate” for achieving clarity on the ultimate level of Trump’s tariffs.

Other countries looking to negotiate

In addition to the steep tariffs on China, Trump has also imposed a blanket 10 per cent tariff on all other U.S. imports and higher duties on steel, aluminum and autos. He has suspended targeted tariffs on dozens of other countries until July 9 and floated additional industry-specific levies on pharmaceuticals and semiconductors. That has roiled financial markets and raised fears of recession.

The European Union, which Trump has threatened with 20 per cent tariffs, would respond with countertariffs if it cannot reach a deal with the United States before the July 9 deadline, economy minister Valdis Dombrovskis said on Wednesday. He said the 27-member trade bloc has offered to buy more liquid natural gas from the United States and reduce tariffs on certain goods.

Other countries are looking to negotiate as well. Vietnam’s trade minister spoke to U.S. Trade Representative Jamieson Greer on Wednesday, state media reported.

The International Monetary Fund said Wednesday the tariffs will slow growth and push debt higher across the globe. S&P Global found that U.S. business activity slowed to a 16-month low in April while prices charged for goods and services soared.

—Reporting by Andy Sullivan

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Biden called the deal a “big win for America” and for tens of thousands of rail workers. Thanking business and labour, the Democratic president promised more worker-company agreements in the future.

“I’m optimistic that we can do this in other fields as well,” Biden said.

“Unions and management can work together for the benefit of everyone,” Biden added.

If they accept the deal that was announced at about 5 a.m., workers whose pay had been frozen will win double-digit increases and will be allowed to seek certain types of medical care without fear of being punished, union leaders said. The agreement includes an immediate 14.1 per cent wage rise, the railroads said.

Unions, whose members bitterly rejected prior proposals, will now vote on the agreement. Even if those votes fail, a rail strike that could have happened as soon as a minute past midnight on Friday has been averted for several weeks due to the standard language included in such a deal, a person familiar with the negotiations said.

Biden’s Labor Secretary Marty Walsh hosted contract talks in Washington that ran for 20 consecutive hours between unions representing 115,000 workers and railroads including Union Pacific, BNSF, CSX, Norfolk Southern and Kansas City Southern, as well as U.S. track owned by Canadian National Railway (CN).

Officials are expected to host a news briefing later on Thursday.

Failing to reach a deal before the deadline would have cleared the way for workers to legally strike.

A rail shutdown could have frozen almost 30 per cent of U.S. cargo shipments by weight, stoked inflation, cost the U.S. economy as much as $2 billion per day and unleashed a cascade of transport woes affecting the U.S. energy, agriculture, manufacturing, healthcare and retail sectors (all figures US$).

U.S. natural gas futures dropped about nine per cent after soaring 10 per cent in the prior session; oil futures fell about four per cent to a one-week low. Diesel and gasoline futures also fell. Investors expected that a rail strike would have threatened coal supplies to power plants and boost demand for rival energy sources.

Amtrak, which runs passenger rail, said it will resume normal service on Friday after cancelling long-distance trains in anticipation of a strike.

The impact of a shutdown also would have stretched beyond U.S. borders because trains link the U.S. to Canada and Mexico and provide vital connections to massive ships that ferry goods from around the globe.

Negotiations between the companies and a dozen unions had stretched for more than two years, leading Biden to appoint an emergency board in July to help break the impasse. Biden personally called Walsh and negotiators on Wednesday evening to prod them toward a deal, telling them “once again to recognize the harm” that a shutdown would have on families, farmers and businesses, according to a person aware of the negotiations.

National Retail Federation CEO Matthew Shay thanked Biden’s administration for intervening, adding in a statement that his group is “relieved and cautiously optimistic.” Emily Skor, CEO of the biofuel trade group Growth Energy, also praised the deal and noted that much of the country’s ethanol moves by rail.

Freight railroads had halted transportation of hazardous goods, including chlorine for water purification and ammonia for fertilizer, as well as shipments of refrigerated food and other goods that use rail and at least one other mode of transport. Their goal was to prevent cargo from being stranded in unsafe locations.

Job cuts

The railroad industry slashed almost 30 per cent of its workforce over the last six years, cutting pay and other costs as they increased profits, stock buybacks and dividends for investors. Profits at billionaire Warren Buffett’s Berkshire Hathaway, which owns BNSF, rose 9.2 per cent in the most recent quarter to $1.7 billion.

The number of U.S. railway workers has dropped from over 600,000 in 1970 to about 150,000 in 2022, according to the Bureau of Labor Statistics, due technology and cost-cutting. The result is that many industry workers are on call at all hours, waiting to respond at short notice to work for days at a time.

The latest deal follows some earlier recommendations of the president’s emergency mediators. It includes a 24 per cent percent wage increase over a five-year period from 2020 through 2024 as well as $1,000 lump sum payments in each of five years.

Biden, who has called himself the most union-friendly president in history and attacked companies for raking in “excessive” profits, praised a deal he said would give workers “better pay, improved working conditions, and peace of mind around their health care costs.”

The president is not yet out of the woods when it comes to supply-chain labour issues. Some 22,000 union workers at 29 West Coast ports that handle almost 40 per cent of U.S. imports are also in high-stakes labour contract negotiations.

Administration officials wanted the disputes resolved ahead of November’s midterm elections that will determine whether Biden’s fellow Democrats retain control of Congress.

Senior congressional leaders had threatened to pass legislation imposing a resolution on the railroads and unions if the negotiations were not successful. U.S. House Speaker Nancy Pelosi praised the tentative agreement and said that Congress was “ready to act” but that “thankfully this action may not be necessary.”

— Reporting by Trevor Hunnicutt in Washington; additional reporting by Lisa Baertlein in Los Angeles, Steve Holland, David Shepardson and Susan Heavey in Washington, Stephanie Kelly in New York, and Jahnavi Nidumolu, Aishwarya Nair, Bansari Mayur Kamdar and Kannaki Deka in Bangalore.

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“I’m not taking any options on or off the table,” White House spokesperson Jen Psaki told a briefing when asked about a carbon tax.

Psaki said President Joe Biden believed it was possible to design a carbon tax that would not violate his pledge not to raise taxes on people making $400,000 or less a year (all figures US$).

Some Democrats, including Senator Ron Wyden, have focused on a carbon tax as a possible alternative as Manchin opposes a key measure in the spending bill called the Clean Energy Payment Program (CEPP).

That measure, which would reward power utilities for investing in renewable energy such as wind and solar and fine those who do not, has been backed by Biden to achieve his climate goals including cutting U.S. emissions by about 50 per cent by 2030 compared to 2005 levels but is effectively dead, Congressional sources say.

Manchin indicated a carbon tax was not in play.

“The carbon tax is not on the board at all,” he told reporters. Manchin, a fellow Democrat, is a centrist from West Virginia, the top U.S. coal producing state after Wyoming.

Representative Pramila Jayapal, the chair of the Progressive Caucus, told reporters that a carbon tax did not come up in a meeting she and other Democrats held with Biden at the White House on Tuesday.

Under a carbon tax, the government sets a gradually rising price for each ton of greenhouse gas that polluters emit, incentivizing industries to move to cleaner energy sources.

One source familiar with discussions in Congress around a carbon tax said the Senate finance committee is weighing a fee in the range of $15-$18 per tonne of CO2 that would steadily rise over the years. Much of the revenue would be returned to consumers as cash payments.

With the U.N. climate summit in Glasgow due to begin in less than two weeks, the White House has been making the case that it can reach Biden’s climate goals even if the legislation does not have everything Biden wanted, including the CEPP.

Psaki cited a report from Rhodium Group, an independent research organization, to underscore White House confidence that Biden’s goals can be met.

Biden moved to re-enter the Paris climate agreement on his first day in office, but he had relied on Congress to deliver legislation to deliver a bulk of the emissions reductions he pledged by the end of the decade.

The back-and-forth among his fellow Democrats in Congress over his bills has threatened to undermine his efforts to reassure the world that he can deliver the U.S. national pledge to slash emissions up to 52 per cent below 2005 levels by 2030.

If Congress is forced to drop certain climate measures, the legislation would still take huge steps on global warming with incentives for electric vehicles and expanded tax credits for renewable power such as wind and solar, according to John Larsen, an author of the report.

“I’m much more worried about no deal than trimmed down bills,” he said.

Manchin urged lawmakers to pass the $1 trillion bipartisan infrastructure bill before the wider spending bill and in time for the U.N. climate talks that start at the end of the month.

Progressive Democrats have said the bills should be passed together to ensure that the debate on wider legislation on climate and social programs does not slip into next year, or get abandoned altogether.

“We have the trust in each other, we should be able to vote immediately on the bipartisan infrastructure bill, which is a tremendous piece of legislation for the president to take with him to Glasgow,” Manchin told reporters.

— Reporting for Reuters by Timothy Gardner, Trevor Hunnicutt, Jeff Mason and Valerie Volcovici.

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