SEOUL — President Donald Trump and his Chinese counterpart Xi Jinping reached a preliminary trade truce Thursday evening local time in the South Korean capital, easing tensions in a dispute over rare earth elements that had threatened to further escalate the trade war between the world’s two largest economies, CNBC reported.
Under the agreement, China will pause for one year the sweeping export controls on rare earths announced Oct. 9 that sparked the conflict. Trump said the deal, reached after weeks of mounting threats on both sides, would likely be “very routinely extended as time goes by.”
“We have a deal,” Trump told reporters aboard Air Force One after the meeting. “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.”
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The truce represents a significant de-escalation following Trump’s threat to impose 100% tariffs on all Chinese imports beginning Nov. 1 in response to Beijing’s export restrictions. Instead, Trump said he has reduced tariffs on China related to fentanyl to 10% from 20%, lowering the overall rate on Chinese goods to roughly 47%, before any additional product-specific levies — like those being charged on certain categories of upholstered furniture — are added.
As part of the agreement, the United States will also postpone a rule announced Sept. 29 that would have blacklisted majority-owned subsidiaries of Chinese firms on an entity list, according to a statement from China’s Ministry of Commerce. Both sides agreed to suspend for one year port fees on ships docking in each other’s ports.
Trump said he plans to visit China in April, while Xi is expected to travel to the U.S. later in the year, either to Palm Beach, Fla., or Washington D.C.
The pause in tensions offers temporary relief to global markets and industries dependent on rare earth minerals, key components in electronics, electric vehicles, and defense equipment. But with the deal subject to annual renegotiation, uncertainty over the long-term trajectory of U.S.-China trade relations remains.
