In an effort to ease tensions between the world’s top two economies, President Donald Trump announced new developments on Wednesday regarding trade relations with China. The arrangement is aimed at facilitating American industries’ access to vital rare earth minerals and magnets sourced from China. As part of the understanding, Trump stated that the U.S. would halt its attempts to revoke the student visas of Chinese nationals attending American universities. This announcement comes after two days of intensive trade negotiations between U.S. and China officials in London.
While Trump characterized the outcome as a “deal,” he elaborated less on specific agreements reached by both parties. Chinese officials, including President Xi Jinping, have yet to confirm the details or formally endorse the agreement. Rather than a comprehensive accord, what emerged is more of a “framework” intended to lay the foundation for future, more detailed discussions.
Confusion arose from Trump’s remarks on social media, particularly concerning tariffs. His post claimed, “WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%. RELATIONSHIP IS EXCELLENT!” However, these figures were misinterpreted as they included existing tariffs, some imposed during his first term, rather than signifying an increase from the previous 30% tariff rates. This has led to uncertainty surrounding the existing $660 billion trade relationship between the U.S. and China.
In another social media update, Trump expressed optimism, stating he and Xi would collaborate to open China further to U.S. trade, asserting such collaboration would be beneficial for both nations. The negotiations involved high-profile U.S. officials, including Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, and their Chinese counterparts, led by Vice Premier He Lifeng.
Since taking office, Trump has pursued a rigorous tariff strategy, using it as a tool to protect U.S. industries, seek to bring industries back to America, and influence international partners. He initially imposed a 10% baseline tariff on imports globally, with higher rates based on individual trade deficits. However, his tariffs, especially targeting China, have been notably capricious, leading to fluctuating duties and sowing uncertainty among businesses reliant on these imports.
Regarding China, after an initial 20% tariff on imports, Trump escalated to 54% in response to perceived inequities in Chinese trade practices. Further retaliation from both sides saw tariffs soar, briefly threatening to paralyze U.S.-China commerce and unsettled financial markets. Both sides subsequently agreed to ease tensions, dropping America’s tariff back to around 30% and China’s to 10%, in a temporary compromise struck in Geneva.
Importantly, China agreed to expedite rare earth shipments, which had been slowed by licensing mandates imposed in April. This concession followed Trump’s threats to dismantle the Geneva accord over the issue. Yet, concerns persist regarding ethical sourcing practices. A rights group highlighted the involvement of major global brands in potentially utilizing forced labor in their Chinese supply chains, particularly involving minerals sourced from Xinjiang, amid allegations of coerced labor among Uyghur Muslims and Turkic minorities in the region.
Analysts have voiced skepticism over the tangible outcomes of these negotiations. Dan Kritenbrink, formerly Assistant Secretary of State for East Asian and Pacific Affairs, described the situation as “a fragile truce,” noting both nations’ awareness of each other’s vulnerabilities. He contended China holds significant sway over the U.S., especially concerning rare earths, with the capacity to influence American industries profoundly.
Despite criticisms framing this agreement as a minor victory for the U.S., the London accord alleviates fears of a looming global supply chain war. In contrast, Danny Russel from the Asia Society Policy Institute interpreted the developments as a rather muted resolution to the U.S.’s stringent policies intended for negotiating power, conceding the U.S. received only a commitment for swifter mineral shipments. Additionally, Veronique de Rugy of George Mason University’s Mercatus Center labeled the agreement as a tenuous “handshake deal,” suggesting its impermanence in the volatile landscape of international trade policy.