President Donald Trump and President Xi Jinping reached a trade truce during a high-stakes meeting in South Korea on Thursday, de-escalating a dispute over rare earth elements that had threatened to push the world’s two largest economies into a full-blown trade war.
China has agreed to pause for one year the sweeping export controls on rare earths announced on Oct. 9 that had touched off the dispute.
Trump told reporters aboard Air Force One that the rare earths agreement is a one year deal that will be “very routinely extended as time goes by.” The president said he plans to visit China in April and Xi will come to the U.S., either Palm Peach, Florida or Washington D.C., at a later date
“We have a deal,” Trump said. “Now, every year we’ll renegotiate the deal, but I think the deal will go on for a long time, long beyond the year. But all of the rare earth has been settled, and that’s for the world.”
Trump said he cut tariffs effective immediately on China related to fentanyl to 10% from 20% previously. This reduces the overall rate on Chinese goods to around 47%, the president told reporters. Trump had previously threatened the slap China with 100% tariffs on Nov. 1 over its rare earth controls.
Did China win?
But the truce reached Thursday between the U.S. and China is not a comprehensive deal, said Nicholas Burns, former U.S. ambassador to China during the Biden administration.
“Where we are is an uneasy truce in a long, still simmering trade war,” Burns told CNBC’s “Squawk Box.”
China successully used its export controls on rare earths and a soybean embargo as leverage to force the U.S. to lower tariffs, Wolfe Reasearch analyst Tobin Marcus told clients in a note.
The U.S. has agreed to postpone a rule announced on Sept. 29 that blacklisted majority-owned subsidiaries of Chinese companies on an entity list, according to a statement from China’s Ministry of Commerce.
Trump said Beijing has agreed to purchase large amounts of a soybeans, sorghum and other farm products. China will buy 25 million metric tons of soybeans annually over the next three years, Treasury Secretary Scott Bessent told Fox Business in an interview.
The U.S. and China also agreed to suspend fees for one year on ships that dock in each other’s ports.
What’s unclear: Nvidia chips, TikTok
Other aspects of the truce are unclear. Trump said he discussed the export of Nvidia chips with Xi and will speak with CEO Jensen Huang about it.
But the discussions did not cover the most advanced Blackwell graphics processing units, the president said. It is up to China and Nvidia to reach a deal, he said.
“I said that’s really between you and Nvidia, but we’re sort of the arbitrator,” Trump said on Air Force One.
China’s Ministry of Commerce said Beijing will work with the U.S. to “resolve issues related to TikTok,” though no further detail was provided. Trump did not mention TikTok during his comments to reporters aboard Air Force One or in a Truth Social post about the truce with China.
And China may also buy a large amount of oil and gas from Alaska, the president said. But a deal still has to be reached. Energy Secretary Chris Wright and Interior Secretary Doug Burgum will meet with Chinese officials to see if such an agreement can be worked out, Trump said.
