President Donald Trump announced Wednesday morning that a deal easing trade tensions with China is “done,” pending final approval from him and Chinese President Xi Jinping.
In a post on his Truth Social site, Trump said the agreement calls for China to supply rare earth minerals and magnets up front. In exchange, the United States will allow Chinese students to continue attending American colleges and universities.
“WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%. RELATIONSHIP IS EXCELLENT!” Trump wrote. Those rates remain higher than before Trump returned to the White House, but they are lower than the 145% and 125% tariffs that the United States and China had imposed on each other earlier this year in what became a de facto trade embargo. Trump’s 55% figure refers to 30% tariffs applied by Trump recently in addition to duties that were already in place. The deal reportedly may also involve the easing of a U.S. ban on exports of jet engines and ethane, used in manufacturing plastics, to China.
The deal was worked out over two days of negotiations in London, led on the U.S. side by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer. It is more of a framework that will set the stage for further talks and, potentially, closer cooperation between the world’s two largest economies. “President XI and I are going to work closely together to open up China to American Trade,” Trump wrote in a follow-up post. “This would be a great WIN for both countries!!!”
Lutnick said that “handshake” deal reinstates the terms of an agreement reached last month to lower tariff rates on each side. That truce was followed quickly by renewed tensions, as each country accused the other of violating the agreement.
“Both sides have now demonstrated that they know where the other’s weak points are,” Dan Kritenbrink, who served as assistant secretary of state for East Asian and Pacific Affairs in the Biden administration, told the Associated Press. “They demonstrated that they both have leverage and tools they can use to inflict damage on the other.”
He added that the Chinese know that their dominance in rare earths gives them “incredible leverage over the United States in the global economy … and they’re not afraid to use it.”
The Wall Street Journal reports that China is placing a six-month limit on export license for rare earths, with sources indicating that “Beijing wants to retain its chokehold on the critical minerals to give it valuable ammunition for future negotiations.”
Bessent says further pause on other tariffs is likely: The treasury secretary said at a Wednesday hearing of the House Ways and Means Committee that it is “highly likely” that a 90-day pause on some tariffs imposed by Trump will be extended for countries that are negotiating “in good faith.”