President Trump said Wednesday that the United States and China reached a deal to revoke some of their punitive measures against each other's economy in recent months, including his administration's recent proposed restrictions on Chinese students attending U.S. universities.
The deal comes after two-day marathon negotiations in London and will arrive in May's trade truce terms, which has intensified tensions among them for weeks thereafter.
“The agreement we reached with China is completed, but it will be finalized with President Xi Jinping,” Mr. Trump wrote in “Society of Truth”. “The relationship is great!”
All details of the agreement have not been released immediately. But this essentially involves China relaxing restrictions on precious rare earth minerals and magnets needed by U.S. manufacturers. In return, U.S. officials will put restrictions on exports of U.S. products and technologies, including ethane and aircraft parts, as well as proposed visa restrictions. Both aim to put pressure on the Chinese.
Tariffs between the two countries will remain unchanged. Trump wrote in his Truth Social Post that U.S. tariffs on China would be “total of 55%. This total has increased his 30% tariff on Chinese products over the past few months and a 25% tariff on certain Chinese products in his first semester. In fact, some have lower tariffs on Chinese products, and many have higher tariffs.
Although Mr. Trump described the deal as a “deal”, officials did not announce progress on any other trade issues, except for rejecting the tit foot measures taken against each other after Trump imposed tariffs on Chinese products in early April.
Wendy Cutler, vice president of the Asian Association and former U.S. trade negotiator, said the U.S. regained access to China's key minerals and magnets by controlling technology on the negotiation table to regain access to China's key minerals and magnets.
“These issues have deliberately avoided the negotiation table because we insist that measures related to national security are not suitable for giving measures to be paid,” she said. “It is obvious that now that this long-standing position has been reversed, the United States has opened the door for China, which will be difficult to close.
Ms. Cutler added: “London’s framework could mean an important turning point in the U.S.-China economic relations.”
Tensions between the United States and China began to spiral after Mr. Trump announced “Liberation Day” tariffs in early April. China is the only country to retaliate immediately, matching Mr. Trump’s tariffs with 34% tariffs on U.S. products.
Beijing has also established a licensing system to limit the export of seven rare earth elements that have been mined and processed almost entirely in China and used for everything from electric vehicles to smart bombs.
Mr. Trump then stopped most of the trade between countries by raising tariffs on Chinese products to at least 145%. This prompted China to raise tariffs, while calling Trump's move “joking.”
Severe tariffs have begun pushing U.S. and China’s trade-dependent companies to business and threaten to raise shelves for vacant U.S. stores later this year. China's mineral and magnet restrictions have also proven to be severely destructive, resulting in a temporary closure of a Ford factory and threatening to shut down other companies.
Officials in the United States and China met in Geneva last month and agreed to suspend higher tariffs within 90 days and withdraw other punitive actions due to collateral damage to their actions.
But since then, U.S. officials have complained about the slow pace of China providing rare earth minerals and magnets to U.S. companies.
The response from U.S. officials was cutting exports of some U.S. products and technologies to China, including software that makes semiconductors; gases such as ethane and butane, and nuclear and aerospace components. U.S. officials also recommend banning Chinese students.
Last week, Mr. Trump made a 90-minute call with Chinese leader Xi Jinping – the first direct speech by the two heads of state since Mr. Trump returned to office in January. Just four days later, U.S. and Chinese officials met at Lancaster House in London to try to resume a truce.
One person familiar with the negotiations said the negotiations continued until late at night and sometimes seemed to collapse.
After the negotiations ended, late Tuesday night, Commerce Secretary Howard Lutnick, a member of the negotiation team, told reporters that U.S. concerns about China's restrictions on minerals and magnet exports have been resolved. He also said the U.S. measures taken by these Chinese restrictions will be “reversed in a balanced manner.”
“We do expect to address the topic of rare earth minerals and magnets in this framework implementation,” Lutnik said.
According to Chinese state media, China's Deputy Commerce Minister Lee Changgang said the negotiations were professional, reasonable, substantial and frank.
China's official Xinhua News Agency issued a cautious statement saying the two sides agreed to “in principle,” a term used by state media and diplomats to point out the details yet to be resolved. According to Xinhua News Agency, the discussion is “professional, rational, in-depth and frank.” When there are considerable differences, Chinese state media often use the term “candal”.
The U.S. reliance on China on rare earth metals and rare earth magnets provides Beijing with a powerful tool to put pressure on the U.S. economy. The U.S. has a rare earth mine at the mountain pass in California, with little ability to process the rare earth into the needed chemicals and then enter the magnet.
Jim Hedrick It will take five years for the United States to undermine its dependence on China.
“China has a 30-year start in rare earth production,” he said. “However, the U.S.-based rare earth industry has made significant progress in production, fast tracking and improved processing.”
Mr Greer, who participated in the discussion, said the two sides would maintain regular contact when trying to work through economic differences, and the two sides agreed after the talks in Geneva. He said no meeting has been scheduled.
Mr Greer also said that despite the broader topic of trade agreements, the current meeting aims to implement the agreement reached in Geneva and the calls from both leaders.
The state agreed to a 90-day pause plan for some tariffs agreed in Geneva, which is scheduled to expire in August. Asked if the pause would be extended, Mr. Greer said both sides were “motivated” to continue speaking, but it was up to Mr. Trump.
Treasury Secretary Scott Bessent, who led the U.S. delegation, told the House committee Wednesday that the meeting this week is targeted at specific goals and a larger agreement with China will be a longer process.
The news was announced Tuesday amid the Trump administration’s struggle for the legality of its tariffs issued in China and other countries.
In Washington, the federal appeals court agreed to allow Mr. Trump to maintain many import taxes, and the lower court declared it illegal in late May. Accommodation will retain the core of the president’s trade agenda, while federal lawyers fight states and businesses that say they are hurt by tariffs Trump has no authority to issue.
U.S. officials said the court's ruling on tariffs was not proposed in discussions with the Chinese.
It is not clear whether the latest framework between the United States and China will hold. Henrietta Treyz, director of economic policy at Veda Partners, wrote in a study that a lot of time for these negotiations is “translation, confirm meaning and reaffirm the framework.” She said this made the negotiations time-consuming, but ultimately led to “maintaining a lot of the status quo, which seems to be something that's coming in London”.
Keith Bradsher Beijing report, Tony Romm From Washington.
