On June 11, 2025, President Donald Trump announced a preliminary trade agreement with China following two days of negotiations in London. The deal, pending final approval by Chinese President Xi Jinping, includes China supplying rare earth minerals to the U.S. for six months and the U.S. imposing a cumulative 55% tariff on Chinese imports, factoring in existing and new levies. In return, China will reduce its tariffs on U.S. goods to 10%. The agreement also allows Chinese students continued access to American educational institutions. While both leaders expressed optimism, financial markets remained cautious, signaling investor wariness.
The 55% U.S. tariff rate is a consolidation of various existing duties, including a 10% baseline “reciprocal” tariff, a 20% levy related to fentanyl concerns, and pre-existing 25% tariffs from Trump’s first term. China’s commitment to supply rare earth minerals is crucial for U.S. industries, particularly in technology and defense sectors. However, the six-month duration of this supply agreement raises questions about long-term stability.
The agreement also addresses educational exchanges, with the U.S. allowing Chinese students to continue studying at American universities. This move reverses earlier restrictions and is seen as a gesture to improve bilateral relations.
Despite the positive tone from both governments, financial markets reacted cautiously. Analysts attribute this to uncertainties surrounding the implementation and enforcement of the deal’s provisions. The agreement builds upon a previous Geneva consensus that had stalled over compliance issues, particularly concerning China’s rare earth export restrictions.
Commerce Secretary Howard Lutnick emphasized that the London negotiations added clarity to the Geneva framework, particularly regarding rare earth exports. Treasury Secretary Scott Bessent highlighted China’s economic vulnerabilities, cautioning against allowing China to “export its way out” of internal economic challenges.
The preliminary deal is seen as a step toward stabilizing U.S.-China trade relations, but significant details remain undisclosed. Both sides aim to finalize a comprehensive agreement by August 10, with ongoing discussions expected to address remaining concerns.
The agreement’s success will depend on mutual adherence to its terms and the resolution of underlying issues that have strained U.S.-China economic ties. As the global economy watches closely, the coming months will reveal whether this preliminary deal can pave the way for a more stable and cooperative trade relationship between the two nations.
