Trump says China will ship rare earths in ‘done' trade deal

Malaysian Reserve

2 days ago

PRESIDENT Donald Trump said a trade framework with China has been completed, with Beijing supplying rare earths and magnets 'UP FRONT' and the US allowing Chinese students into its colleges and universities.
The US and China will maintain tariffs at their current, lower levels following the two nations' agreement this week in London, Trump said Wednesday. That number is still higher than before the president took office. Trump said Chinese President Xi Jinping and he must still formally sign off on the agreement.
'OUR DEAL WITH CHINA IS DONE, SUBJECT TO FINAL APPROVAL WITH PRESIDENT XI AND ME,' Trump posted on social media. 'WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%. RELATIONSHIP IS EXCELLENT!'
Yet after months of tense back-and-forth between Washington and Beijing, it remained unclear if the latest round of negotiations brought the two sides closer to an ultimate understanding on trade — or if it just amounted to more talk.
'Trump is mentioning the current tariff status, in a misleading way, to show he has the upper hand,' said Neo Wang, lead China macro analyst at Evercore ISI.
Trump's comments prompted fresh questions about the terms of the pact US and Chinese negotiators reached Tuesday. Markets had a mixed reaction on Wednesday to comments from Trump and his team, with US equity indexes fluctuating throughout the day.
In a later post, Trump said Xi and he 'are going to work closely together to open up China to American Trade. This would be a great WIN for both countries!!!'
US Commerce Secretary Howard Lutnick, speaking briefly to reporters at the White House later Wednesday, said he thinks the latest pact will be completed within days and that he didn't expect a written version to be released publicly.
Trump's initial post suggested China may have to restart rare earth shipments before the US agrees to lower export controls on key technology. And his comments left doubt about whether Beijing could negotiate tariff rates lower.
'They are going to approve all applications for magnets from United States companies right away,' Lutnick said on CNBC. 'As they do that, we'll take off our measures.'
Read more: GLOBAL INSIGHT: US-China Tariffs' Wild Ride – In One Chart
Some Chinese suppliers to US companies recently received six-month rare earth export licenses, but uncertainty remained about a large backlog of applications, the American Chamber of Commerce in China said last week. Beijing is putting a six-month limit on the licenses in order to keep leverage if trade tensions flare again, the Wall Street Journal reported.
The tariff figure Trump posted includes a 10% baseline duty, a 20% charge tied to fentanyl trafficking and roughly 25% from preexisting levies from his first term as well as most favored nation rates, according to a White House official — though the precise total remained unclear.
Asked on CNBC if tariff levels will remain unchanged, Lutnick responded 'you can definitely say that.'
China's Ministry of Commerce did not immediately respond to requests for comment.
The US and China reached an agreement on Tuesday following marathon negotiations to implement the terms of a tariff truce reached last month in Geneva. Investors were closely watching the talks, amid fears that recent tensions could spiral out of control and reignite open trade warfare between the world's two largest economies.
Still, details were scarce at the conclusion of the two-day negotiating session and Trump rushed to fill in the void.
'FULL MAGNETS, AND ANY NECESSARY RARE EARTHS, WILL BE SUPPLIED, UP FRONT, BY CHINA,' Trump said in his post. 'LIKEWISE, WE WILL PROVIDE TO CHINA WHAT WAS AGREED TO, INCLUDING CHINESE STUDENTS USING OUR COLLEGES AND UNIVERSITIES (WHICH HAS ALWAYS BEEN GOOD WITH ME!).'
The London meeting came together on short notice following a call last week between Trump and Xi, after both nations accused the other of violating the Geneva accord. US officials accused China of stalling magnet shipments, while Beijing vented anger with fresh Trump administration controls on chip design software, jet engines and student visas.
That quarrel demonstrated the central role of export controls in the economic rivalry between the two superpowers. China dominates the market for rare earths necessary for defense and electric vehicle production globally, and it also craves more advanced chips to advance its artificial intelligence ambitions.
Under the pact, China pledged to speed up shipments of rare earths critical to US auto and defense firms, while Washington agreed to ease some of its own export controls, according to Lutnick. Curbs related to the most advanced chips would remain in place, the Commerce chief said Wednesday.
'It's very clear we are competing with China in the AI race' Lutnick said on CNBC. 'We are just not going to give them our best chips, and of course they want them.'
He also said limits on key items like plane parts and ethane the US recently imposed were meant to create leverage for negotiations with Beijing.
'When they pulled out their card of these rare earth magnets, we put in ours that said, 'look, you just can't do that to America,'' Lutnick said. 'If you want to annoy us, the United States of America under Donald Trump is strong enough to annoy you back equally.'
The Geneva agreement included a 90-day pause on very high tariffs both nations implemented on each others' imports that amounted to a de facto trade embargo. It's unclear whether that deadline, which expires in August, remains in effect and if the two sides could use the time to further reduce import taxes.
The recent round of discussions also did little to repair fundamental issues, such as China's massive trade surplus with the US, and a belief in Washington that Beijing is dumping goods on its markets.
US Trade Representative Jamieson Greer said Tuesday that no further meetings are scheduled, though noted that the sides talk frequently. China's chief trade negotiator Li Chenggang struck a similar tone, telling reporters Tuesday that 'we hope the progress we made will be conducive to building trust.' –BLOOMBERG