What Does the New US-China Trade Agreement Mean for Future Deals?

In a significant development, the US and China have finalized a new trade agreement, with President Trump expressing hopes for a similar deal with India. While details remain sparse, the agreement follows earlier discussions aimed at easing trade tensions. The focus on rare earth minerals and fentanyl regulations highlights ongoing negotiations that could reshape international trade dynamics. As both nations navigate these changes, the implications for global economies and future agreements are profound. Read on to explore what this means for the US, China, and potential trade relations with India.

By Narendra Chaudhary Jun 27, 2025, 14:47 IST

US and China Forge New Trade Agreement

Bangkok: President Donald Trump announced that the United States and China have finalized a new trade agreement, expressing optimism about a forthcoming deal with India as well.

Commerce Secretary Howard Lutnick revealed to Bloomberg TV that the agreement was signed earlier this week, although specific details were not disclosed by either Lutnick or Trump.

During a late Thursday statement, Trump mentioned, “We just signed with China the other day.”

Lutnick confirmed that the deal was officially signed two days prior.

It remains uncertain whether this latest agreement differs from the one Trump previously announced, which aimed to facilitate American industries' access to essential magnets and rare earth minerals. This earlier pact allowed trade discussions to progress while the US agreed to halt efforts to revoke visas for Chinese nationals studying in the US.

On Friday, China's Commerce Ministry stated that both nations had “further confirmed the details of the framework.”

However, the statement did not specifically address US access to rare earth minerals, which are crucial for high-tech applications and have been a focal point in negotiations.

The ministry noted, “China will approve the export applications of controlled items that meet the conditions in accordance with the law. The United States will cancel a series of restrictive measures taken against China accordingly. It is hoped that the United States and China will meet each other halfway.”

This agreement follows initial discussions in Geneva earlier in May, which led to both countries postponing significant tariff increases that could have severely impacted trade. Subsequent talks in London established a framework for negotiations, and the deal mentioned by Trump seems to formalize that arrangement.

Lutnick remarked, “The president likes to close these deals himself. He’s the dealmaker. We’re going to have deal after deal.”

While China has not announced any new agreements, it did indicate earlier this week that it would expedite the approval process for rare earth exports, which are vital for high-tech products like electric vehicles. Restrictions on rare earth exports have been a major point of contention.

The Chinese Commerce Ministry also stated that it was accelerating the review of export license applications for rare earths and had approved several compliant applications.

The focus on export controls for these minerals has overshadowed tariffs in the latest trade negotiations, especially after China imposed new permitting requirements on seven rare earth elements in April, which threatened to disrupt production in the US and globally.

Additionally, China has recently taken measures regarding fentanyl, announcing that it would classify two more substances as precursor chemicals, subjecting them to production, transport, and export regulations.

Trump has urged Beijing to take stronger action to curb the flow of these precursor ingredients to Mexican drug cartels, which utilize them to manufacture fentanyl for distribution in the US.

He has imposed a 20 percent tariff on Chinese imports related to the fentanyl issue, contributing to the overall 30 percent tariffs currently applied to Chinese goods.

The agreement reached in May in Geneva called for both nations to reduce punitive tariff hikes that Trump had escalated during the trade war. Some tariffs, particularly those related to fentanyl and duties on aluminum and steel, remain in effect.

The rapidly changing policies are impacting both of the world's largest economies.

The US economy saw a contraction at an annual rate of 0.5 percent from January to March, partly due to a surge in imports as businesses and consumers rushed to acquire foreign goods before potential tariffs were imposed.

In China, factory profits plummeted by over 9 percent year-on-year in May, with automakers experiencing a significant portion of that decline, falling more than 1 percent from January to May.

Trump and other US officials have indicated their expectation of reaching trade agreements with several other nations, including India.