Trump Xi Trade Deal Brings Tariff Cuts and Rare Earth Truce

• The United States and China have signed a major trade agreement aimed at easing tensions after years of economic confrontation. Finalised in Busan, South Korea, in November 2025 , the pact between U.S. President Donald Trump and Chinese President Xi Jinping sets out measures to reduce tariffs, reopen agricultural trade, and suspend restrictions on key industrial materials. The deal is valid for one year , marking a temporary but important step toward trade normalisation between the two largest global economies.

Tariff Reductions and Fentanyl Cooperation

• The U.S. will cut tariffs on certain Chinese goods, including those linked to fentanyl precursor chemicals , from 20% to 10% , bringing the average tariff rate down from 57% to about 47% . This aims to ease supply chain costs while improving cooperation against the fentanyl crisis that has caused widespread deaths in the United States.

China Suspends Rare Earth Controls

• Beijing has agreed to pause for one year its export controls on rare earth minerals such as gallium, germanium, antimony, and graphite. These materials are vital for defence, electronics, and renewable energy industries. The suspension reverses restrictions imposed in 2022 and 2025 , allowing U.S. companies greater access to these critical inputs.

Mutual Suspension of Tariffs and Blacklists

• Both sides will withdraw or suspend retaliatory tariffs introduced since March 2025 . China will lift duties on U.S. agricultural products, including soybeans, pork, wheat, dairy, and cotton , and remove some American firms from its unreliable entity list . The U.S. will freeze the expansion of its Commerce Department blacklist for one year, reducing friction in the technology and semiconductor sectors.

Maritime and Agricultural Commitments

• The U.S. will suspend new port fees on Chinese ships , while China will remove its own logistics sanctions . Under the agreement, China will purchase 12 million metric tons of U.S. soybeans by the end of 2025 and 25 million tons annually from 2026 to 2028 , along with renewed imports of sorghum and hardwood logs .

Both nations also pledged to enhance joint enforcement against illicit fentanyl trade, marking a cooperative shift in economic and security relations.

Key Facts for Exams:

• Signed: Busan, South Korea – November 2025

• U.S. tariffs cut: 57% → 47%

• Rare earth export controls: Paused for one year

• China’s soybean purchase: 12 million tons (2025)

• Validity: One-year accord