Trump and Xi Reach Trade Truce: US Lowers Tariffs, China Halts Rare Earth Export Controls:

In a significant step toward easing tensions between the world’s two largest economies, United States President Donald Trump announced a landmark agreement with Chinese President Xi Jinping to lower certain U.S. tariffs and prevent China from implementing export controls on rare earth minerals. The announcement comes amid a trade war that has rattled global markets and disrupted supply chains. The deal was revealed following a face-to-face meeting between Trump and Xi on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in South Korea. It marked the first direct encounter between the two leaders since 2019. Trump described the discussions as highly productive, stating that the two countries had made “outstanding groups of decisions.” According to the U.S. president, the agreement will initially be valid for one year, with a formal signing planned “pretty soon.” China’s President Xi Jinping, speaking more cautiously through state media, highlighted the importance of long-term cooperation. The Xinhua news agency reported Xi as saying that China and the U.S. had held “in-depth talks” and reached consensus on several solutions to ongoing trade issues. Xi urged both sides to focus on sustainable benefits of collaboration rather than engage in cycles of retaliation. One of the most significant aspects of the truce concerns rare earth minerals. These critical resources, used in products ranging from smartphones to advanced military equipment, have long been dominated by Chinese producers. China had previously planned to impose strict export licensing requirements on these minerals, prompting fears of widespread supply chain disruptions. However, under the new agreement, China will suspend its planned restrictions, a move Trump celebrated as a major victory. “Rare earth minerals will hopefully disappear from our vocabulary for a little while,” he said after departing South Korea. The trade deal also addresses tariffs related to the flow of fentanyl, a synthetic opioid that has contributed to a public health crisis in the U.S. Trump announced he would reduce a 20 percent tariff on Chinese imports tied to fentanyl precursors to 10 percent. In exchange, China pledged to intensify efforts to curb the illegal export of synthetic opioids. Despite these concessions, other tariffs remain unchanged. The average U.S. tariff on Chinese goods continues to hover around 47 percent, while China maintains an average tariff rate of about 32 percent on U.S. products. Analysts suggest the limited tariff reduction on fentanyl-related imports represents a compromise, allowing the U.S. to retain leverage in ongoing trade discussions while giving China a strategic benefit. Shan Guo, a partner at Shanghai-based consultancy Hutong Research, noted that China had long sought the fentanyl-related tariff reduction. “China is now achieving what it wants using rare earths as leverage,” Guo explained. “The 10 percent reduction, rather than a full 20 percent cut, reflects the U.S.’s intention to maintain some negotiating power in future discussions.” In addition to tariffs, agricultural trade also featured in the negotiations. Trump said that China had agreed to purchase “tremendous amounts” of U.S. soybeans and other farm products, offering a boost to American farmers amid ongoing trade uncertainties. The agreement signals a potential thaw in U.S.-China relations and provides temporary relief for industries and markets affected by the trade war. While some tariffs remain, the deal reduces the immediate risk of economic disruptions and sets the stage for further negotiations on trade, technology, and strategic resources.

NEWS