Formal agreement pending Trump announces agreement in trade dispute with China
An agreement has been reached in the trade dispute between China and the USA.
11.06.2025, 14:28
11.06.2025, 15:11
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- China and the USA have agreed in principle to reduce export restrictions on rare earths, although formal approval by Trump and Xi Jinping is still pending.
- As part of the agreement, China will continue to supply rare earths to the US, while Chinese students will continue to be allowed to study at US universities.
- The agreement points to an easing of tensions in the trade conflict, although high tariffs (55% US to China, 10% China to US) remain in place and the situation remains fragile.
According to US President Donald Trump, China and the US have agreed to reduce export restrictions on rare earths in trade talks. Formal approval by himself and China's head of state Xi Jinping is still pending, it was reported.
Representatives from both countries negotiated in London. Vice Premier He Lifeng and Commerce Minister Wang Wentao were among those sitting at the table for China during the negotiations. The USA had sent US Secretary of the Treasury Scott Bessent and Secretary of Commerce Howard Lutnick.
According to the US President, China undertakes to supply the USA with certain raw materials such as rare earths. In return, Washington pledged that students from China would continue to be admitted to US universities.
Trump also wrote that there is an agreement between the world's two largest economies in the tariff dispute. Trump wrote that the tariffs on imports from China to the USA would be 55 percent. China will receive 10 percent, according to the US president. The relationship is "excellent".
Signs of easing tensions
It had already become known during the night that the two largest economies in the world had agreed on a framework to implement the consensus reached by the presidents of both countries in their telephone conversation on June 5 and which the negotiators had reached at talks in Geneva in mid-May, China's trade negotiator Li Chenggang told the official Xinhua news agency. The trade conflict between Beijing and Washington has had serious consequences for the global economy for months.
The end of the meeting had indicated a path for further de-escalation in the tense trade relations. Prior to the talks in London, China and the USA had spoken to each other in Geneva in mid-May for the first time since the escalation in the tariff dispute. There, both sides agreed to significantly reduce their tariffs temporarily for 90 days.
Trump had increased the surcharges on goods from China to up to 145% in April. Beijing imposed export controls and followed up with counter-tariffs on imports from the USA to 125%. The US President has been pursuing a tough trade policy against China since taking office. Despite the agreement reached on a tariff pause in Geneva, the tone has recently intensified again.
Focus on rare earths had become apparent
US President Donald Trump's economic advisor Kevin Hassett, for example, had already indicated that the focus in London would be less on reciprocal tariffs and more on Chinese export restrictions for rare earths. He recently stated on CNBC that the aim of the talks was to reach an agreement in principle on this issue. The People's Republic controls around 90 percent of the global market for these raw materials and special magnetic materials, he said.
Following a telephone call with China's head of state and party leader Xi last week, US President Trump expressed confidence that China would resume the supply of rare earths.
The consequences of export controls on rare earths
China dominates the global market for rare earths, which are very important for the manufacture of many products. These are raw materials that the industry needs for electric motors and sensors, for example.
At the beginning of April, the People's Republic imposed export controls on seven rare earths and magnets made from them in a customs dispute with the USA. As a result, companies had to submit complex applications for approval to export these raw materials, which are urgently needed for electric motors, sensors and in the defense industry. The restriction caused companies around the world great concern.
China is a major processor of the metals, but is dependent on foreign countries for high-tech products such as certain equipment for aircraft or chip design software. To Beijing's annoyance, the USA recently restricted exports of this technology to China.
