U.S. President Donald Trump, left, met with Chinese President Xi Jinping during the G20 summit in Japan in 2019. Mr. Trump says the relationship between the U.S. and China is 'excellent' after the two countries reached a détente on several issues.Susan Walsh/The Associated Press
President Donald Trump says the U.S. has reached an agreement with China to stand down on a series of punitive measures enacted over the past month, returning the two economic giants to the partial trade-war détente reached in May.
The U.S. government said Wednesday that the deal involves China agreeing to stop restricting exports of rare earth minerals and related magnets to the U.S. in exchange for the U.S. reversing planned restrictions on Chinese students and lifting export controls on software.
The full deal, reached after two days of talks at Lancaster House in London, was not immediately released.
“OUR DEAL WITH CHINA IS DONE, SUBJECT TO FINAL APPROVAL WITH PRESIDENT XI AND ME,” Mr. Trump wrote on Truth Social. “RELATIONSHIP IS EXCELLENT!”
He added that he and Chinese President Xi Jinping “are going to work closely together to open up China to American trade.”
Commerce Secretary Howard Lutnick told CNBC that China is now going to “approve all applications for magnets from United States companies right away. Think of that language: right away. Very much like the same day.”
The magnets and the minerals from which they are made are used in cars, military hardware and other products.
Mr. Lutnick said tariffs between the two countries will remain unchanged. The U.S. will continue to levy 30-per-cent tariffs on Chinese goods, plus a 25-per-cent tariff on some products that was imposed during Mr. Trump’s first term. China’s tariff on U.S. imports will stay at 10 per cent.
“We like our position. We like the way things are working with China,” Mr. Lutnick said of the negotiations. “Every inch of that room was gold-leafed. It was, like, the perfect place to negotiate a Donald Trump deal.”
Not everyone was so excited.
Treasury Secretary Scott Bessent told a congressional committee hearing Wednesday that “China has proven an unreliable partner” and “we will see” if Beijing fulfills the bargain this time. He said the text of the agreement wasn’t available yet because “we are in the midst of constructing it.”
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Mr. Bessent, who said he flew back to the U.S. capital from London at 4 a.m. after talks finished, cautioned that the agreement was narrowly focused on resolving the critical minerals issue and did not represent a full trade deal between the two countries.
“It will be a longer process. The trade deal today – or last night – was for a specific goal,” he said.
Nor does the agreement represent a truce on the broadest front of Mr. Trump’s global trade war. A large chunk of Mr. Trump’s tariffs on China remains in place as does Beijing’s lower tariff on Washington.
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Beijing’s official news agency, Xinhua, referred to the deal as an “agreement in principle.”
The agreement effectively restores the situation as it was in May, when the two countries agreed to dial back tariffs for 90 days while they worked on a broader trade agreement. Before that, Mr. Trump had imposed 145-per-cent tariffs on China, which retaliated with 125-per-cent levies. Those eyewatering figures had all but shut down trade and raised fears that the U.S. would soon face shortages of a wide range of consumer goods.
After the May 12 deal in Geneva, however, the Trump administration accused China of breaking the agreement by withholding shipments of magnets and critical minerals. The U.S. retaliated with a plan to revoke the visas of Chinese students in “critical fields” and a clampdown on exporting software for making semiconductors.
Mr. Trump and Mr. Xi spoke by phone last week for the first time since Mr. Trump returned to office, a key step toward de-escalating tensions.
The off-again, on-again trade restrictions have been a hallmark of the U.S. President’s commercial policy in his second term.
He imposed a sweeping set of tariffs on nearly every country and territory in the world on April 2, which he dubbed “liberation day.” Within a week, he had rolled most of those back after a stock market rout.
He next hiked tariffs on China in a bid to focus the trade attack on the U.S.’s primary economic adversary. But he eventually reversed many of those, too, amid fears of severely damaging the U.S. economy.
Before “liberation day,” he separately imposed 20-per-cent tariffs on China to punish it for Chinese-made fentanyl in the U.S. Those, plus the 10-per-cent remainder of the “liberation day” levies and 25 per cent from Mr. Trump’s first term, mean many Chinese goods face 55-per-cent tariffs in the U.S. even after the President’s climbdowns.