- The US and China are close to finalizing a trade deal that would reduce tariffs from their 2025 peaks.
- China agrees to supply rare earth minerals to the US, while the US eases restrictions on Chinese students.
- Markets show cautious optimism, but businesses remain wary of potential reversals.
A Tentative Truce in the Trade War
President Trump has announced that a US-China trade deal is "done," pending final approval, marking a significant de-escalation after months of escalating tariffs. The agreement would set US tariffs on Chinese goods at 55%, down from a peak of 145% earlier this year, while Chinese tariffs on US goods would drop to 10%. The deal also includes provisions for China to supply rare earth minerals—critical for tech and defense industries—and for the US to allow increased access for Chinese students to American universities.
Market Reactions and Lingering Uncertainty
The reduction in tariffs has already provided short-term relief to Chinese exporters and manufacturers, according to recent trade data. However, businesses on both sides remain cautious, with many delaying major investments until the deal is fully ratified. "This could be a turning point, but we’ve seen false starts before," said one anonymous executive at a multinational manufacturing firm. The US continues to enforce a separate 20% tariff on Chinese imports tied to fentanyl and border security, which remains unchanged.
Diplomatic and Economic Implications
The agreement stems from a 90-day reprieve negotiated in May, which temporarily halted the steepest tariffs. If finalized, it could stabilize trade relations, though experts warn that underlying tensions—particularly around technology transfer and intellectual property—remain unresolved. A potential Trump visit to China and further talks in Sweden later this summer could shape the next phase of negotiations. For now, the WTO’s latest trade tracker reflects the sharp drop in tariffs, signaling a tentative step toward normalization.