U.S. and China Ease Trade Tensions with New Agreement Amid Ongoing Challenges
BUSAN, South Korea (AP) — Three-digit tariffs are off the table, but import duties on each other remain higher than they were in January. Rare earth materials will flow more smoothly, yet China has implemented an export permitting regime that it can tighten or loosen as needed. Port fees will be eliminated, but only for one year. And Beijing has resumed purchasing U.S. soybeans after having abruptly cut off American farmers.
After months of posturing, arguing, and threatening, U.S. President Donald Trump and Chinese leader Xi Jinping have essentially turned back the clock. While Trump hailed the meeting as a “roaring success,” the resulting agreement may largely serve to undo some of the damages the trade war inflicted since Trump returned to the White House.
“It is hard to see what major gains the U.S. has made in the bilateral relationship relative to where things stood before Trump took office,” said Eswar Prasad, an economist at Cornell University.
On the Senate floor, Minority Leader Chuck Schumer denounced the deal from South Korea, stating it leaves the U.S. “no better off.” He criticized the trade war, saying, “If anything, things are worse: Prices have gone up and China has agreed to nothing of substance that will improve trade between our nations.” Schumer added that Trump “started a trade war, created a giant mess for businesses, consumers, and soybean farmers, and then he celebrates for trying to clean up the very mess he created in the first place.”
Nevertheless, the deal has injected a degree of stability, giving the world’s two largest economies, along with the global community, time and room to readjust. Washington and Beijing still need to finalize their agreements—a process that always carries the potential for fresh disputes. For now, though, Xi appears interested in moving past the latest tensions.
In an official statement, Xi referred to “recent twists and turns” that “offered some lessons for both sides.” He emphasized the importance of “focusing on the benefits of cooperation rather than falling into a vicious cycle of mutual retaliation.”
Both Sides Reduce Tariffs, Resume U.S. Soybean Sales to China
Trump initiated the trade war in February by imposing an additional 10% tariff on Chinese goods, citing Beijing’s failure to address the flow of chemicals used to produce fentanyl. These tariffs escalated to as much as 145% following Chinese retaliation, but were later scaled back after market disruptions.
In May, both sides agreed to cut their massive tariffs to 10% on each other, while Washington retained a 20% fentanyl-related tariff, and China maintained retaliatory tariffs of 10% to 15% on U.S. farm goods. Now, Trump announced the removal of one 10% fentanyl tariff in exchange for China’s cooperation in combating the illicit drug trade.
U.S. Secretary of Agriculture Brooke Rollins stated that China would also withdraw retaliatory tariffs on U.S. agricultural products. A Chinese Ministry of Commerce spokesperson confirmed that Beijing would “adjust accordingly” its countermeasures, though specific details were not provided.
Additionally, China agreed to purchase 12 million metric tons of U.S. soybeans through January and will import at least 25 million metric tons annually over the next three years, Treasury Secretary Scott Bessent revealed on Fox Business Network’s Mornings with Maria. For context, China bought 17 million metric tons of U.S. soybeans in the first eight months of the year but imported none in September. In 2024, China reportedly purchased 22 million metric tons, according to state media.
Although China has not publicly confirmed the details of the newest soybean deal, the commerce ministry stated that both sides have reached a “consensus” to expand agricultural trade.
One-Year Truce on Export Controls and Port Fees
China, leveraging its monopoly in processing critical minerals, introduced a permitting requirement in April for exporting several rare earth elements. On October 9, Beijing expanded these export rules, apparently responding to the U.S. decision to extend export controls to businesses affiliated with already blacklisted foreign companies.
In response, Trump threatened to impose a 100% tariff on China, but diplomatic efforts prevailed, paving the way for the leaders’ meeting in South Korea. Beijing announced it would pause the rare earth export permitting rules for one year starting in October “to conduct research to refine specific plans.” Concurrently, the U.S. agreed to suspend its affiliate rule for a year.
Wade Senti, president of U.S. permanent magnet company AML, said the pause “provides just enough time for the United States to accelerate investment in capabilities and innovation for rare earths and permanent magnets.” He emphasized this effort “needs to be on warp speed and at a scale never seen before since the COVID-19 response.”
Another contentious issue had been the U.S. introduction of port fees in October targeting China-linked vessels, part of a plan to restore America’s shipbuilding capabilities. Beijing retaliated with countermeasures. The port fees have not been removed but will be suspended for one year, the Chinese commerce ministry confirmed.
Future Remains Uncertain
Whether Trump will accept a return to the status quo or push to tackle fundamental issues persisting for years between the U.S. and China remains unclear. Nothing in Thursday’s meeting—the first between Trump and Xi in six years—addresses Chinese manufacturing dominance, which Trump has blamed for America’s loss of blue-collar jobs.
Sean Stein, president of the U.S.-China Business Council, described the latest developments as “very encouraging.” He expressed hope that future negotiations will “address long-standing market access barriers, help level the playing field for U.S. companies, and bring long-term predictability to the bilateral trade relationship.”
Opportunities to continue tackling these challenges remain. Trump indicated he will visit China in April, with Xi expected to visit the U.S. subsequently. If Trump’s efforts fall short, this period could be remembered as much ado about nothing relative to the ongoing trajectory of China’s rising economy.
“Generally, Trump grows impatient with anything beyond the immediate, and it is the Chinese that play for longer term advantage,” said Kurt Campbell, former deputy secretary of state in the Biden administration and chairman of The Asia Group.
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Tang and Wiseman reported from Washington. Josh Funk in Omaha, Neb., contributed to the report.
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