Export breakthrough: U.S. and China reach agreement

Two days of talks between the United States and China officials have ended in London, resulting in a framework agreement to maintain the trade truce, lift some export restrictions, and resolve issues related to the supply of rare earth minerals and magnets. United States Secretary of Commerce Howard Luthnick said that the agreement should be a continuation of talks that had been focused on easing mutual tariffs, which in some places reached 145%.

It was reported by Reuters.

China and the United States agree on trade duties 

Earlier, the Geneva Agreement was threatened by Beijing's continued restrictions on the export of strategic minerals, to which the Trump administration responded with its own measures, including a ban on the supply of semiconductor software, aircraft equipment, and chemical products to China. The new agreements should remove some of these barriers, but final approval will depend on the approval of the leaders of both countries, Donald Trump and Xi Jinping.

The Chinese Vice Minister of Commerce Li Chenggang confirmed that an agreement in principle had been reached and would be submitted to the heads of state for consideration. However, despite the positive developments, the parties have not yet resolved several key differences. These include American duties and China's export-oriented economic model.

Experts warn that if the framework agreement fails, tariff rates could rise sharply in August: by 145% on the part of the United States and by 125% on the part of China. That is why, according to Lutnick, the agreement is of strategic importance, especially for the supply of rare earth elements, which are critical for the United States' electric vehicle and high-tech industries. China virtually controls the global market for such materials, and the April ban on magnet exports caused serious disruptions in international supply chains.

Despite some easing of tensions, stock markets reacted with restraint. The index of Asia-Pacific shares outside Japan rose by only 0.57%. According to analysts, investors expected a similar outcome.

Meanwhile, the Trump Administration's harshest tariffs continue to be in effect in the United States, at least until the court decision that upheld them is reviewed. This puts additional pressure on Beijing, as American sanctions have already affected China's exports to the United States, which fell by a record 34.5% in May. In turn, the World Bank has lowered its global growth forecast for 2025 due to these threats.

The trade war has caused significant damage to the businesses of both countries, provoking congestion in ports and price increases. Speaking in Beijing, the President of the European Central Bank, Christine Lagarde, said that resolving the conflict would require economic policy adjustments by many countries, otherwise the global economy would face large-scale damage.

As a reminder, the Senate has recently announced that it may cancel the 500% duty for some countries.

Also, in late May, the United States Federal Court ruled that Donald Trump had overstepped his authority when he approved the new duties.

It should be noted that in May, Donald Trump also agreed with the European Union to "delay" consideration of the issue of trade duties until July 9, 2025.