US and China Unveil New Trade Agreement: Details Inside

WASHINGTON — The U.S. and China have once more arrived at an agreement intended to diminish trade tensions. However, the specifics remain unclear, with significant issues between the two largest global economies still unaddressed.

President Donald Trump announced late Thursday that a deal had been secured with China “the other day.” China’s Commerce Ministry confirmed on Friday that some form of arrangement was made, though it provided limited details.

Frequent policy swings and vague statements have characterized Trump’s trade approach since returning to the White House, targeting what he describes as an unjust global trade framework disadvantaging the U.S. and its workers.

He has been locked in a prolonged trade conflict with China, revealing the mutual damage both countries can inflict. This is while racing towards a July 8 deadline to negotiate agreements with other major U.S. trading partners.

The uncertainty surrounding Trump’s deals and the tariffs’ impact, which U.S. importers pay and typically pass on to consumers, raises concerns about the U.S. economy’s future. Analysts welcome the apparent reduction in tensions with China but caution that the issues dividing Washington and Beijing won’t be resolved soon.

What’s in the deal? U.S. Treasury Secretary Scott Bessent stated Friday that China eased restrictions on American companies acquiring Chinese magnets and rare earth minerals vital for manufacturing and microchip production. Previously, China had slowed exports amid the trade dispute with the Trump administration.

While not explicitly addressing U.S. access to rare earths, the Chinese Commerce Ministry mentioned that China would lawfully review and approve export requests for controlled items. Consequently, the United States plans to lift some restrictive measures against China.

China has raised concerns over U.S. constraints on exporting advanced U.S. technology, but it remains unclear if the United States intends to relax or remove these controls. In a “Mornings with Maria” appearance on Fox Business Network, Bessent referred to the United States imposing “countermeasures” on China, adding that “some vital supplies” were withheld.

“This is an easing of tensions under President Trump’s leadership,” Bessent remarked without detailing the U.S. concessions or their implications on export controls. Former trade official Jeff Moon, now with China Moon Strategies consultancy, questioned the lack of details disclosed by Trump despite reaching the agreement two days prior.

“Silence about the terms suggests there’s less substance to the deal than the Trump Administration implies,” noted Moon, who previously served in China as a diplomat.

How did we reach this point? The agreement follows a “framework” Trump’s administration revealed on June 11 after high-level talks between the U.S. and China in London. There, China agreed to ease restrictions on rare earths, while the U.S. promised to stop revoking Chinese students’ visas.

Last month, after a meeting in Geneva, both nations agreed to significantly reduce the hefty tariffs imposed on each other’s goods—up to 145% on China and 125% on the U.S. These astronomical tariffs risked ending trade between the two countries, causing financial markets to plummet. Post-Geneva, tariffs were revised: America’s to 30% and China’s to 10%. This respite led to the London talks earlier this month and the present announcement.

Where does this leave U.S.-China economic relations? At the very least, efforts aim to dial down tensions after both parties showed each other the extent of potential economic harm.

“The U.S. and China seem to be relaxing their grips on each other’s economies through respective export controls on computer chips and rare earth minerals,” stated Eswar Prasad, a Cornell University professor of trade policy. “It’s a positive step, but it falls short of indicating a significant reduction in tariffs and trade hostilities.”

Trump initiated a trade war in his first term, slapping tariffs on most Chinese items over allegations that China sought to displace U.S. technological dominance. Trump’s trade team accused China of unfairly subsidizing its tech firms, coercing foreign companies into handing over critical technology to gain Chinese market entry, and engaging in outright intellectual property theft.

Recent negotiations have barely advanced Washington’s grievances over China’s alleged unfair trade practices and the $262 billion U.S. trade deficit with China from last year.

“This week’s agreement includes nothing addressing the U.S.’s concerns about China’s trade surplus or non-market conduct,” remarked Scott Kennedy of the Center for Strategic and International Studies. “Once they implement these ceasefire elements, they might negotiate the root causes of the original tension escalation.”

What about Trump’s other tariffs? Since resuming office in January, Trump aggressively wielded tariffs. Aside from levies on China, he placed 10% “baseline” taxes on products from all countries. He also announced steeper “reciprocal tariffs” from 11% to 50% on countries running trade deficits with the U.S.

However, fearing global trade disruptions, Trump suspended reciprocal tariffs for 90 days to facilitate negotiations and lower barriers to U.S. exports. This suspension ends July 8.

Bessent told Fox Business Network on Friday that these talks might extend beyond the deadline and finalize by Labor Day, Sept. 1, with 10 to 12 of America’s significant trading partners.

Downplaying the July 8 deadline at a White House press conference, Trump emphasized ongoing negotiations, stating, “With roughly 200-plus countries, it’s impractical.”

Instead of crafting new deals, Trump plans to issue a letter outlining terms for doing business in the U.S. in the coming days or weeks.

Separately, Trump abruptly targeted Canada on Friday, immediately halting trade discussions due to Canada’s upcoming tax on tech firms. He denounced Canada’s digital services tax as a “direct and blatant attack on our country.”

The digital services tax affects companies like Amazon, Google, Meta, Uber, and Airbnb, imposing a 3% levy on Canadian user revenue. This retrospective tax leaves U.S. companies with a $2 billion bill due by month’s end.