Trump Announces Breakthrough Deal with China on Rare Earths, Averting Further Trade War Escalation

In a dramatic turn, President Donald Trump announced a significant agreement with China regarding rare earth minerals and magnets, potentially easing trade tensions between the two economic giants. The deal, he declared on Truth Social, is “done,” pending final approval from himself and President Xi Jinping.

This announcement follows two days of intense negotiations in London, aiming to resolve disputes that arose after a May truce. These talks, involving high-level officials from both countries, built upon a June phone conversation between Trump and Xi Jinping. While details remain scarce, the agreement appears to address US concerns over China’s export restrictions on rare earth minerals – crucial components in various technologies, from smartphones to electric vehicles.

US Commerce Secretary Howard Lutnick described the outcome as a framework for implementing previous agreements, clarifying and strengthening the existing truce. He highlighted the positive momentum, stating that the talks “cleaned up” the Geneva agreement and that things “feel really good.” White House Press Secretary Karoline Leavitt confirmed that Trump had reviewed the deal and approved its direction.

In exchange for increased access to these critical minerals, the US reportedly agreed to ease some “counter-measures,” although specifics remain undisclosed. Treasury Secretary Scott Bessent clarified that this recent agreement is narrowly focused, suggesting a more comprehensive deal will require further negotiations.

This development follows earlier trade disputes marked by escalating tariffs. The May truce, while temporarily easing tensions by lowering tariffs on both sides, had seen subsequent accusations of non-tariff breaches. Trump’s announcement suggests a pathway to de-escalation, although analysts like Terry Haines of Pangaea Policy caution that the agreement’s scope is limited and its long-term impact remains uncertain.

The market showed a muted response, reflecting the deal’s limited immediate impact. While the agreement avoids further escalation for now, the underlying geopolitical complexities between the US and China remain largely unresolved.

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