What is the trade deal that US, China have reached
What's the story
The United States and China have reached an agreement to speed up rare earth shipments. The deal was announced by a White House official on Thursday, amid efforts to resolve ongoing trade tensions between the two countries. President Donald Trump had earlier confirmed that a deal was signed with China on Wednesday but did not provide further details. He also hinted at a potential separate deal that would "open up" India.
Trade discussions
Deal follows US-China trade talks in Geneva
The latest agreement comes after US-China trade talks in May in Geneva. During these talks, Beijing had agreed to lift non-tariff countermeasures against the US that were imposed on April 2. However, it was unclear how some of these measures would be lifted. China had suspended exports of critical minerals and magnets in retaliation to new US tariffs, disrupting supply chains for automakers, aerospace manufacturers, semiconductor companies, and military contractors globally.
Export restrictions
China had suspended exports of critical minerals and magnets
In response to these curbs, the Trump administration imposed its own export controls on shipments of semiconductor design software, aircraft, and other goods to China. "The administration and China agreed to an additional understanding for a framework to implement the Geneva agreement," a White House official said on Thursday. According to the official, the understanding is "about how we can implement expediting rare earths shipments to the US again."
Delivery assurance
US Commerce Secretary confirms agreement
US Commerce Secretary Howard Lutnick also confirmed the agreement, saying, "They're going to deliver rare earths to us." Lutnick also told Bloomberg Television that Trump was ready to finalize a number of trade accords in the coming two weeks in connection with his July 9 deadline to reintroduce higher tariffs that he paused in April. "We're going to do top 10 deals, put them in the right category, and then these other countries will fit behind," he said.
Export controls
China taking dual-use restrictions on rare earths seriously
China has been taking its dual-use restrictions on rare earths "very seriously," an industry source told Reuters. This has slowed down the licensing process as China vets buyers to ensure materials aren't diverted for US military uses. In early June, it was reported that China had issued temporary export licenses to rare-earth suppliers of the top three US automakers amid supply chain disruptions.