President Trump announced a "deal" with China on rare earth materials after high-level talks aimed at alleviating trade tensions, although details remain vague and the path to a comprehensive agreement appears lengthy.
Trump Declares Completion of Rare Earths Agreement with China Amid Trade Tensions
Trump Declares Completion of Rare Earths Agreement with China Amid Trade Tensions
Recent negotiations between the US and China culminate in a preliminary agreement on rare earths and technology exports, as both nations seek to reduce ongoing trade hostilities.
In a significant development amidst ongoing US-China trade tensions, President Donald Trump has proclaimed that a deal concerning rare earth materials and magnets has been reached following intense negotiations over two days in London. Trump shared this news on his platform, Truth Social, indicating that the agreement is awaiting final approval from both himself and Chinese President Xi Jinping.
The talks came as both nations grapple with escalating tariffs that have previously threatened to disrupt their bilateral trade relations since a truce was agreed upon in May of this year. In that period, tariff tensions surged, raising fears of a trade war that could systematically damage the economies of the world’s two largest markets. Following a phone conversation last week between Trump and Xi, the negotiations in London saw key officials from both sides working on refining the terms of their previous agreements.
While specific details of the newly slated agreement are scant, hope rests on a framework that would broadly adhere to the outlines of the May truce. This truce had already yielded some reductions in tariffs imposed by both countries. China's Vice Commerce Minister Li Chenggang reiterated this sentiment, stating a consensus had been reached for implementing the previously discussed agreements, while US Commerce Secretary Howard Lutnick expressed cautious optimism.
The ongoing dialogue was partly instigated by US worries that China was delaying rare earth exports crucial for a myriad of technologies like smartphones and electric vehicles. Correspondingly, Beijing has decried US restrictions on semiconductor access, which directly impacts their technological developments.
In relaying progress, Lutnick mentioned that some of the punitive measures from the US would be adjusted, although he refrained from offering specifics on these changes. Treasury Secretary Scott Bessent indicated that broader negotiations would require more time, highlighting the complexity underlying the economic relationships involved.
Historically, these trade tensions flared when the US imposed heavy tariffs on imports from various nations, largely affecting Chinese goods, prompting similar retaliatory actions from China. The truce established in May marked a reduction in new tariffs, facilitating short-term trading conditions, but recent claims of breaches of the agreement have underscored the fragility of these arrangements.
The market response to the latest declaration of a "deal" was muted, with experts suggesting that the scope of the agreement is limited and may not represent a significant step toward broader trade resolution. According to Terry Haines from Pangaea Policy, reinstating the Geneva agreement to its previous state is a minimal achievement and does not signal impending advancements in a comprehensive US-China trade relationship.
