China Responds Swiftly After U.S. Arms Sale to Taiwan
The U.S. administration was caught off guard after China $CFX abruptly canceled a major agricultural purchase shortly following Washington’s announcement of a massive arms deal with Taiwan.
On December 17, the United States unveiled a new military sales package to Taiwan valued at $11.1 billion, the largest such deal in U.S.–Taiwan history. The package includes 82 HIMARS long-range rocket systems, 420 tactical missiles, 60 M109A7 self-propelled howitzers, along with additional land, sea, and air defense equipment. U.S. officials stated the move was intended to strengthen Taiwan’s defensive capabilities.
Beijing, however, strongly opposed the decision, stating that the arms sale violates the One China principle and the three U.S.–China joint communiqués, calling it a serious interference in China’s internal affairs.
Less than 24 hours after the announcement, the U.S. Department of Agriculture confirmed that China had fully canceled an order for 132,000 tons of American white wheat. The deal had been expected to be the largest wheat transaction between the two countries in 2025.
The sudden cancellation sent shockwaves through U.S. agricultural markets. Wheat futures on the Chicago Mercantile Exchange dropped to an eight-week low, falling roughly 10% from their November peak.
Analysts view this move not as a routine commercial decision, but as a calculated response from China. Only weeks earlier, following October trade talks in Kuala Lumpur, U.S. media had reported that China was resuming purchases of American wheat. At the time, U.S. leaders publicly assured farmers that exports to China would increase.
Now, the consequences are being felt on the ground. Much of the canceled wheat shipment was sourced from Iowa, where agricultural cooperatives reportedly held emergency meetings as concerns grew over surplus supply and falling prices.
The episode underscores how geopolitical tensions can quickly spill over into global trade, impacting markets far beyond diplomacy and defense.