Following a meeting between President Trump and President Xi Jinping, both nations announced a temporary truce in their trade disputes. The agreement includes the US indicating it would lower tariffs on Chinese imports and China agreeing to suspend controls on rare earth exports. Negotiations will continue, with both sides acknowledging that a final deal has not been reached, and underlying differences persist in the competitive economic relationship.
Meeting Discussions and Initial Responses
President Trump characterized his meeting with Chinese leader Xi Jinping as a "great success," rating it "12, on a scale of 1 to 10." China's initial statement indicated a focus on follow-up, with President Xi urging teams on both sides to "follow up as soon as possible." A subsequent detailed Chinese statement confirmed several points, including an indication that the US would lower tariffs on Chinese imports and China's agreement to suspend controls on the export of rare earths.
Key Commitments and Ongoing Negotiations
While no formal deal has been finalized, the agreement serves to stabilize the relationship between the two economies and has been noted by global markets. Negotiators from both countries have engaged in discussions for months to address trade details. Rare earths are critical minerals used in the manufacturing of smartphones, electric cars, and military equipment. The agreement addresses specific points of contention, though underlying differences in the competitive relationship between the two nations remain.
China's Economic Context and Prior Actions
China had previously implemented retaliatory tariffs on US goods after the US increased its own tariffs. Chinese officials have stated that trade disputes would result in no winners. China's economic stability relies on continued growth, job creation, and wealth generation to support the Chinese Communist Party's authority.
Prior to the truce, China had limited exports of rare earths to the US. China processes approximately 90% of the world's rare earth metals. Washington had prioritized the relaxation of these export controls. Additionally, China had ceased purchasing US soybeans, an action that impacted farmers in US states. Reports indicate that Beijing has recently resumed buying soybeans from the US.