Measures to de-escalate the trade war between their countries were taken today by the US president and his Chinese counterpart.
In particular, President Trump proceeded with some tariff reductions on behalf of , while the US responded by suspending the restrictions he had imposed on the trade of rare earths and magnets and also by resuming the purchases, on its behalf, of American soybeans.
and extends the fragile trade truce between the world’s two largest economies for about a year.
But what are the main points of the agreement?
The reduction of tariffs on Chinese products related to fentanyl
imposed by Donald Trump on Chinese products related to the supply of opioid chemicals such as fentanyl from China. The reduction to 10 percent in tariffs first imposed in February would reduce the overall U.S. tariff rate on Chinese imports to about 47 percent from 57 percent today, according to Trump administration officials.
The 47% tariff rate is lower than the 50% tariffs the US has imposed under President Trump on products from India and Brazil after it imposed extra punitive tariffs on those countries for political reasons. At the same time, Canada, the biggest buyer of US exports, will face 35% tariffs on products not included in the new North American trade deal if Trump follows through on his threat of an additional 10% tariff on Canadian imports.
The pause in China’s rare earth export controls
For its part, China agreed to suspend for a year export controls on rare-earth minerals and magnets, which are vital in making cars, planes and weapons and have become Beijing’s most powerful trade leverage in its trade war with Washington. The new global controls would require export licenses for products containing even traces of elements from a vastly expanded list and were aimed at preventing their use in military products.
However, the Chinese decision does not affect the more limited controls put in place in April in response to Trump’s “Liberation Day” tariffs, allowing Beijing to retain some control and leverage in the sector. After all, the long-running US-China negotiations over the summer laid out rare earth control and shipping procedures aimed at keeping the metals produced in China flowing, and those procedures have been extended.
The suspension of the US export freeze
that the Commerce Department drew up with Chinese companies barred from buying American high-tech products, a move largely aimed at banning the use of subsidiaries and other affiliates to circumvent controls.
We are essentially talking about companies that are more than 50% owned by companies already on the list, which would further magnify the impact on the Chinese economy by banning US exports to thousands more Chinese companies.
China’s commitment to buy US soybeans
In addition, US Treasury Secretary Scott Bassett said China had agreed to buy 12 million tonnes of US soybeans in the current trading year, through January, and pledged to buy 25 million tonnes in each of the next three years.
It is recalled that China had largely stopped buying US soybeans in recent months, not even buying a ton in September after sourcing all its beans from Brazil and Argentina. The move created a new advantage for Beijing in negotiations, adding economic damage to American farmers, one of Donald Trump’s key constituencies.
However, the soybean commitments will bring China back to its previous levels of purchases from the US, analysts said. In 2024, the US exported nearly 27 million tons of soybeans to China. China promised to significantly expand soy purchases in the “Phase One” trade deal with Trump that ended the trade war in 2020, but never met those goals as the COVID-19 pandemic unfolded.
The suspension of new port fees by the Trump administration
Finally, the Trump administration agreed to suspend for one year new port fees on Chinese-built, owned and flagged ships, which add millions of dollars in costs on each trip to US ports.
The tariffs, aimed at countering China’s global dominance of shipbuilding, shipping and the supply chain while reviving the U.S. commercial shipbuilding industry, took effect on Oct. 14, along with 100 percent tariffs on Chinese-made ship-on-shore cranes.
Port charges have disrupted cargo flows, driving up container rates as shippers seek to avoid China-bound vessels. China has imposed its own fees on US-bound vessels, including those from global shippers with 25% US ownership.
