U.S.-China Trade Truce Revived: What You Need to Know About the Latest Deal
After weeks of mounting tensions and confusing headlines, the U.S. and China are finally signaling a fresh start on their trade dispute. President Donald Trump took to his Truth Social platform on Wednesday to announce that a new deal to revive the trade truce with China is essentially done—pending final approval from himself and Chinese leader Xi Jinping.
Trump outlined some headline-grabbing details: China will supply the U.S. with critical rare earth elements and magnets upfront, and Chinese students will continue to attend American colleges and universities. Oh, and tariffs? The U.S. will hold firm at a “total of 55% tariffs,” Trump said—meaning the 30% tariffs he imposed during his second term will stay, added to the duties from his first term. China, on the other hand, is getting just 10%.
A Framework Born in London
This announcement came after a fast-paced, two-day negotiation session in London, where representatives from both sides hashed out a new framework to get the trade truce back on track. Officials described the deal as essentially restoring a pact first agreed to in Switzerland last month. That earlier deal had seen both sides lower tariffs and promised that China would speed up issuing export licenses for critical minerals—a key sticking point in the trade war.
Commerce Secretary Howard Lutnick put it simply: “The two largest economies in the world have reached a handshake for a framework. 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. That’s the process.”
Li Chenggang, a senior Chinese negotiator, echoed those remarks, saying both countries “agreed in principle.”
Rare Earths: The Heart of the Matter
One of the biggest flashpoints in these talks was rare earth minerals. These elements are crucial for high-tech U.S. industries—from electric vehicles to semiconductors to advanced military hardware. The U.S. side, led by Treasury Secretary Scott Bessent and Commerce Secretary Lutnick, was focused on getting China to speed up the export of these critical materials. China had previously agreed to this in Geneva, but delays and restrictions have frustrated American companies.
China’s negotiating team, headed by Vice Premier He Lifeng—who is known as a close aide to Xi Jinping—pushed back hard. They demanded the U.S. loosen restrictions on technology sales and other exports to China significantly. Those tech restrictions have been a major sore spot throughout the trade war, as the U.S. worries about protecting sensitive technologies while China sees these controls as unfair barriers.
Despite the hard bargaining, the negotiators stayed mum on the exact details of the new framework. That lack of transparency leaves some uncertainty about what will ultimately be agreed to—and suggests that Trump’s approval might be needed to reverse some of the export controls Beijing requested.
After a phone call with Xi last week set the stage for the London talks, Trump said, “There should no longer be any questions respecting the complexity of rare-earth products.” Lutnick echoed that optimism in London, saying, “You should expect those to come off, sort of, as President Trump said, in a balanced way, when they approve” the rare-earth licenses.
Tariff Numbers: What’s the Real Deal?
Trump’s announcement on tariffs raised some eyebrows. He mentioned a “total of 55% tariffs,” which refers to the combined tariffs from his two presidential terms. But an administration official clarified that tariffs will stay at the levels agreed to in the Switzerland deal, which meant lowering some of the higher tariffs imposed earlier.
The U.S. and China had initially agreed to lower their “sky-high tariffs” as a way to cool the trade conflict, but since then, both sides have accused each other of using non-tariff tactics to throttle exports and stall progress.
The U.S. claimed China was dragging its feet on export licenses for rare earth minerals and magnets—an accusation that strikes at the heart of U.S. manufacturers who rely on those materials. Meanwhile, China pushed back hard against new U.S. restrictions on technology exports, like jet engines and chip-design software, and also expressed frustration over the Trump administration’s plans to revoke visas for Chinese students studying in America.
Students and Trade: More Than Just Economics
The fate of Chinese students in the U.S. became a surprising subplot in this saga. Mounting political and security concerns have put their status under the microscope, with the Trump administration cracking down on foreign students it suspects might be linked to espionage or intellectual property theft. Trump’s post directly acknowledged Chinese students’ continued ability to attend American colleges, a small but notable olive branch in an otherwise tense negotiation.
Diplomatic Ripples and Reactions
The official Chinese news agency, Xinhua, criticized the U.S. for viewing economic issues through a security lens, warning that this approach could become the “biggest obstacle” to future cooperation. However, it also expressed hope that stronger economic ties could benefit both countries.
Shan Guo, a Shanghai-based partner at advisory firm Hutong Research, sees the new framework as only the first step toward a broader deal. She noted that “both sides would want deterrence to prevent the other side from violating the truce,” emphasizing the low level of political trust between the two powers.
Christopher Wood, Jefferies’ global head of equity strategy research based in Hong Kong, called the London talks “damage control” but also acknowledged that the two sides “got things back on track.” Still, he said the rare-earths issue gave China “real leverage” in negotiations. After Trump raised tariffs on Chinese goods to above 100% at one point, exporters and consumers alike felt the pinch, forcing a rethink.
Now, with a rare-earth shortage threatening American automakers’ production lines, the U.S. found itself back at the negotiating table—while China stresses it was Washington that requested these talks.
Wood summed it up: “If you had a test case for how not to approach China, this is it.”
What’s Next?
Commerce Secretary Lutnick told The Wall Street Journal that he expects Trump to approve the framework deal as early as Wednesday or Thursday following the London talks. “I feel really good about where we got to,” Lutnick said, suggesting momentum toward smoothing over the rocky relationship.
That said, many analysts believe this deal won’t settle everything overnight. Export controls, technology sales, student visas, and tariffs remain thorny issues with deep political roots. The hope is that this framework sets the stage for calmer, more predictable economic relations moving forward—but the road ahead is still long and winding.
Quick Takeaways:
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Tariffs: U.S. holds firm on 55% total tariffs, China at 10%, but the exact tariff landscape remains a bit fuzzy.
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Rare Earths: China to speed up exports of critical minerals, vital for U.S. tech and defense.
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Students: Chinese students keep their visas and access to U.S. colleges.
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Negotiations: Framework hammered out in London, restoring last month’s Switzerland pact.
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Tensions: Export controls and tech restrictions remain sticking points.
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Trust: Both sides skeptical; deal seen as damage control, not a final peace treaty.
The whole saga is a classic example of high-stakes diplomacy where economics, technology, national security, and education intersect—keeping the global spotlight firmly on Washington and Beijing.
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