President Trump and China’s Xi Jinping finalised a sweeping trade deal in Busan, South Korea, hailed by the White House as a “massive victory”, marking a fragile truce in the escalating tariff and export-control war between the world’s two largest economies.
Key Takeaways
- Tariffs Cut: The U.S. will halve fentanyl-related tariffs from 20% to 10%, cutting the overall US duty rate on Chinese imports from 57% to 47%. Broader tariff reductions take effect Nov. 10, 2025.
- Rare Earths Pause: China agreed to suspend new export controls on rare earth minerals, magnets, gallium, germanium, and graphite — effectively reversing curbs from April 2025 and October 2022.
- Farm Purchases Resume: Beijing will buy 12 million tons of US soybeans by year-end and 25 million tons annually through 2028, while resuming sorghum and hardwood imports.
- Fentanyl Crackdown: China pledged to curb precursor chemical flows and cooperate with U.S. enforcement groups in tracking fentanyl shipments, a major condition for the tariff relief.
- Tech & Ports: Both sides paused new export bans and shipping fees; the US will delay a planned blacklist expansion targeting Chinese affiliates and freeze port fees on Chinese-linked vessels for a year.
Inside the Deal
The White House said the pact “safeguards US economic strength and national security while putting American workers first.” China’s commitments include lifting retaliatory tariffs, ending non-tariff measures on U.S. industries, and reopening markets to major American exporters hit during the trade war.
Beijing also agreed to resume chip trade from Nexperia’s Chinese facilities and terminate investigations into U.S. semiconductor firms, a move expected to ease global supply-chain tension.
In return, Washington will extend Section 301 tariff exemptions through 2026 and suspend new export restrictions tied to China’s shipbuilding and logistics sectors.
Strategic Impact
Analysts see the deal as a temporary de-escalation rather than a lasting peace. Many commitments, including the rare earth pause and tariff cuts, expire by late 2026. Still, markets welcomed the move, viewing it as a sign that both leaders sought stability after months of supply-chain shocks and currency volatility.
Trump called the South Korea summit a “12 out of 10,” declaring:
“We have a deal. It’s historic — and it puts America first again.”
Xi’s delegation framed it as “a balanced step forward for global trade.”
What’s Next
The deal caps Trump’s Asia tour that also yielded trade agreements with Malaysia and Cambodia and investment pledges from Japan and South Korea.
Ongoing working groups will now set enforcement metrics on fentanyl controls and agricultural commitments — a test of whether the fragile détente can hold through 2026.
The Trump-Xi pact eases tariffs, opens farm trade, and pauses tech restrictions — but the real test begins in enforcement. As one analyst noted: “This isn’t the end of the trade war. It’s just the halftime whistle.”
