What Trump and Xi agreed to in the U.S.-China trade truce
President Donald Trump and President Xi Jinping reached a trade truce at a high-stakes meeting in South Korea on Thursday, easing a dispute over rare earth elements that threatens to push the world’s two largest economies into a full-blown trade war.
China has agreed to pause for a year its sweeping export controls on rare earths that have sparked controversy, announced on October 9.
The rare earth deal is a one-year agreement that will be “routinely extended as time goes on,” Trump told reporters aboard Air Force One. The president said he plans to visit China in April, and Xi will come to the United States from Palm Peach, Florida, or Washington, D.C., at a later date.
“We have a deal,” Trump said. “We will renegotiate the agreement every year now, but I think the agreement will continue for a long time, well beyond the year. But the rare earths are all resolved and that’s for the world.”
Trump said he immediately reduced fentanyl-related tariffs on China from 20% to 10%. This has reduced the overall rate on Chinese goods to around 47%, the president told reporters. Trump had previously threatened China with 100% tariffs on November 1 over rare earth controls.
According to the statement made by the USA, the USA will postpone the rule announced on September 29 regarding the blacklisting of subsidiaries majority owned by Chinese companies. China Ministry of Commerce.
The US and China also agreed to suspend fees on ships docking at each other’s ports for a year.
Did China win?
Beijing surprised the White House by imposing strict export controls on rare earths ahead of the meeting between Trump and Xi, using its dominance of the global supply chain to gain leverage over Washington.
The United States is dependent on China for rare earth elements used to produce magnets that are important inputs in weapons platforms, semiconductor manufacturing, electric vehicles and other applications.
Xi has successfully used rare earth export controls and a soybean embargo to force the U.S. to lower tariffs, Wolfe Research strategist Tobin Marcus said in a note to clients.
Nicholas Burns, former US ambassador to China during the Biden administration, said the ceasefire reached between the US and China was not a comprehensive agreement.
“Where we are is an uneasy truce in a long-simmering trade war,” Burns told CNBC’s “Squawk Box.” he said.
Ceasefire uncertainty in key regions
It’s unclear exactly what China has agreed to in key areas such as agriculture and US energy purchases
Trump said Beijing agreed to buy large quantities of soybeans, sorghum and other agricultural products. China will purchase 25 million metric tons of soybeans annually over the next three years, Treasury Secretary Scott Bessent said in an interview with Fox Business.
However, China’s Ministry of Commerce said the two sides agreed to expand agricultural trade, without providing any details.
Trump said China could buy large amounts of oil and gas from Alaska, but an agreement still needs to be reached. Trump said Energy Secretary Chris Wright and Interior Secretary Doug Burgum would meet with Chinese officials to see if such an agreement could be reached.
Trump said he discussed the export of Nvidia chips with Xi and would discuss this issue with CEO Jensen Huang. But the talks did not cover the most advanced Blackwell graphics processing units, the chairman said. He said it was up to China and Nvidia to reach an agreement.
“I said this is actually between you and Nvidia, but we’re kind of the arbitrators,” Trump said aboard Air Force One.
China’s Ministry of Commerce said Beijing would work with the United States to “resolve TikTok-related issues,” but no further details were provided. Trump did not mention TikTok in his comments to reporters on Air Force One or in his Truth Social post about the ceasefire with China.
