US and China Forge New Trade Framework to Ease Tensions
New Trade Agreement Between US and China
On Tuesday, the United States and China reached an agreement aimed at reducing trade tensions and lifting restrictions on rare earth mineral exports that China had imposed on the US, according to reports.
Details regarding the framework remain vague. This development follows an earlier agreement made nearly a month ago, where both nations decided to pause tariffs on each other's products for a period of 90 days.
However, the deal that was established in Geneva faced challenges due to China's ongoing limitations on the export of critical minerals. In response, the US implemented restrictions that hindered the shipment of semiconductor design software, aircraft, and other goods to China.
After two days of discussions in London, US Commerce Secretary Howard Lutnick stated that the newly established framework adds substance to the agreement made on May 12 in Geneva, which aimed to alleviate retaliatory tariffs.
Lutnick emphasized that both nations would work towards executing the 'Geneva consensus' and had addressed the key issues dividing the two largest economies in the world.
He also mentioned that the agreement would facilitate the removal of restrictions on Chinese exports of rare earth minerals and magnets, while also addressing some of the recent US export limitations in a balanced manner.
Rare earth elements, which are essential for the transition to green energy, consist of 17 elements starting with lanthanum. China currently holds a dominant position in the global market for these minerals, leading in reserves, production, and exports.
Lutnick indicated that the framework would proceed following approval from US President Donald Trump and Chinese President Xi Jinping. He noted, 'Once the presidents approve it, we will then seek to implement it.'
In a separate briefing, Chinese Vice Commerce Minister Li Chenggang described the discussions with the US as 'professional, rational, in-depth, and candid.' He expressed hope that the progress made during the London meeting would foster greater trust between the two nations.
The Geneva talks in May marked the first in-person engagement between US and Chinese officials since Trump resumed office in January.
Earlier, on April 2, the US announced 'reciprocal' tariffs on numerous countries, including a 26% 'discounted' levy on India. Trump had previously indicated his intention to impose a reciprocal tax on India and other nations due to their high tariffs on US goods.
On April 9, the reciprocal tariffs imposed by the US on various countries came into effect. Shortly after, Trump reduced the tariff rates on imports from most nations to 10% for 90 days to allow time for trade negotiations. However, tariffs on China were raised to 125% at that time.
The US president cited a 'lack of respect' from Beijing towards global markets as a reason for the increased tariffs on Chinese imports.
As tensions escalated, the US ultimately imposed a 145% tariff on Chinese imports, while China retaliated with a 125% tariff on US goods, alongside restrictions on rare earth mineral exports to the US.