• U.S. and China agree on key trade terms, subject to final approval by Trump and Xi.
  • Tariffs on both sides have been reduced, but disputes over rare earths and tech exports linger.
  • Markets cautiously optimistic as negotiators prepare to finalize details.

A Tentative Step Forward

President Donald Trump and Chinese President Xi Jinping concluded a 90-minute phone call focused entirely on trade negotiations, signaling progress toward a potential deal. Both leaders described the talks as positive, though the agreement remains subject to final approval. Teams from both nations are expected to meet soon to iron out remaining details, according to sources familiar with the discussions.

The latest developments follow a temporary truce reached on May 12, where the U.S. slashed tariffs on Chinese goods from 145% to roughly 30%, while China reduced its tariffs on American imports from 125% to 10%. The 90-day pause was intended to create breathing room for broader negotiations amid escalating trade tensions.

Lingering Friction Points

Despite the progress, underlying tensions persist. The U.S. has accused China of restricting rare earth exports—a critical component for electronics and defense industries—while Beijing claims Washington is undermining the deal through new export controls on AI chips and threats to revoke Chinese student visas. These sticking points could complicate final negotiations.

China’s manufacturing sector, already under pressure, faces additional uncertainty as trade policy remains in flux. Recent economic indicators have slipped below expectations, reflecting both domestic challenges and the broader impact of U.S.-China friction.

What Comes Next?

With negotiators set to reconvene, the focus will be on resolving disputes over rare earths and technology transfers. While the market reaction has been cautiously optimistic, skepticism remains given the history of stalled agreements and sudden escalations.

“The deal isn’t done until both leaders sign off,” one analyst noted, emphasizing the high-stakes nature of the negotiations. Even if finalized, deeper structural issues—like tech dominance and supply chain security—are likely to keep tensions simmering long after the ink dries.