Trump says deal restoring China trade truce is done

The US will get magnets and rare earth minerals from China under a new trade deal with tariffs on Chinese goods set at 55pc.

Donald Trump and Xi Jinping. Artwork by Emilia Tortorella. Sources: supplied and iStock. Ratio 16:9.

President Trump said the US deal with China to revive their trade truce was done, subject to final approval from himself and Chinese leader Xi Jinping.

Posting on his Truth Social platform on Wednesday, Trump said China would supply critical rare earths and magnets upfront, and Chinese students would be able to attend US colleges and universities. “WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%,” he added.

Tariffs will stay at levels agreed to in the deal signed in Switzerland, an administration official confirmed. Trump said in his post that the US would set a “total of 55% tariffs” — a reference to the 30 per cent tariffs applied in his second term, added to duties imposed during the president’s first term.

Mounting tensions between the countries have put the status of Chinese students under the spotlight, particularly as the Trump administration wages a war on foreign students on US campuses.

Trump’s post filled in some details of a hastily arranged framework negotiated over two days in London this week, which officials said would get the trade truce back on track and ratchet down tensions between the two biggest economies.

Representatives from the US and China said the framework would essentially restore a pact they agreed to in Switzerland last month, a deal that saw both sides lower tariffs and was premised in part on Beijing’s promise to speed critical mineral export licenses while negotiators kept talking.

“The two largest economies in the world have reached a handshake for a framework,” Commerce Secretary Howard Lutnick said. “We’re going to start to implement that framework upon the approval of President Trump, and the Chinese will get their President Xi’s approval, and that’s the process.”

A rare-earth metals mine in Jiangxi Province, China. The country provides most of the world’s supply. Picture: Reuters

A senior Chinese negotiator, Li Chenggang, nodded to Lutnick’s remarks, saying the two sides “agreed in principle.”

The framework marked the latest twist in a winding trade war — one that had been ratcheting up in recent weeks following the earlier détente.

Lutnick later told The Wall Street Journal that he expects Trump to approve the agreement as soon as Wednesday or Thursday. “I feel really good about where we got to,” he said.

A key goal for the US negotiators, led by Treasury Secretary Scott Bessent and Lutnick, was to get China to speed up exports of rare-earth minerals and magnets containing them as their Chinese counterparts had agreed to in Geneva last month.

The Chinese team, led by Vice Premier He Lifeng, a trusted aide to leader Xi Jinping, drove a hard bargain by asking the US side to loosen restrictions significantly on the sale of technology and other products to China, according to people familiar with the matter.

The US and Chinese trade delegations in London. Picture: AFP / US Treasury Department

The negotiators didn’t disclose exactly what they had agreed to as part of the framework, which could lead to continued uncertainty over the trade truce. And the lack of announced details might suggest the US side will need Trump’s approval to undo some of the controls Beijing’s representatives asked for.

Following a phone call with Xi last week that paved the way for the London talks, Trump had said, “There should no longer be any questions respecting the complexity of rare-earth products.” Lutnick echoed that sentiment when talking to reporters in London.

“You should expect those to come off, sort of, as President Trump said, in a balanced way, when they approve” the rare-earth licenses, Lutnick said. “Then you should expect that our export implementation will come down,” he said.

Last month, Washington and Beijing agreed to reduce sky-high tariffs on imports in a de-escalation of trade hostilities. Both sides had since accused each other of violating the spirit of that agreement by using nontariff means to throttle exports.

The US accused China of slow-walking export licenses for rare earths and magnets, critical components needed by US companies for advanced machinery such as cars, semiconductors and military aircraft.

China bristled at new US restrictions on exports to China of American technology including jet engines and chip-design software, as well as the Trump administration’s plan to revoke the visas of Chinese students studying at American colleges.

A recent commentary by the official Xinhua News Agency criticised the US for allegedly viewing economic issues through the lens of security, saying, “This thinking will become the biggest obstacle” to co-operation between the two countries. Yet it also left the door open for relations to improve, saying strengthening economic ties will benefit both nations.

US Commerce Secretary Howard Lutnick. Picture: Oliver Contreras / AFP

Shan Guo, a Shanghai-based partner at the advisory firm Hutong Research, said the framework agreement is likely the first step of many toward reaching a broader deal and doesn’t expect export controls to be fully resolved.

“Both sides would want deterrence to prevent the other side from violating the truce,” she said, adding that there is “little political trust in each other.”

Christopher Wood, global head of equity strategy research at Jefferies in Hong Kong, said the London meeting “looks like damage control, but it looks like they’ve got things back on track.”

Still, he said, “What’s become clear in the last few weeks is that this rare-earths issue has got real leverage for Beijing.” After raising tariffs on China to above 100 per cent, Trump agreed to lower them as exporters and consumers felt the pain.

Now, with a shortage of rare earths threatening automakers’ ability to keep production lines running, the US has had to come back to the table — as China stresses that it was Washington that asked for the talks.

“If you had a test case for how not to approach China, this is it,” Wood said.

Wall Street Journal