President Donald Trump and Chinese leader Xi Jinping agreed to a one-year pause in their economic arms race Thursday in South Korea.
But many of the details, including what exactly China and the U.S. have conceded to each other, remain murky.
It’s also unclear whether the ever mercurial Trump and Xi, known for abandoning deals as soon as they no longer suit his purposes, will follow through on their commitments.
"The real question in trade negotiations, even between the world's two largest economies, is whether Mr. Trump, and now even Mr Xi, who is ‘on’ to his U.S. counterpart, will both make good on what each promised the other orally,” said Harry Broadman, a former assistant U.S. trade representative in the George H.W. Bush and Bill Clinton administrations. “Businesses and investors would be wise to not hold their breath."
One person close to the Trump administration, granted anonymity to discuss their analysis of the preliminary details of the countries’ agreement,” said that “on its face, the deal doesn’t necessarily make a lot of sense, in terms of the details that we already know.”
That’s because China, according to Trump, has made significant concessions to the U.S., including substantial soybean purchases, a one-year suspension of its sweeping export controls on any products containing Chinese rare earths and a vague commitment to crack down on precursor chemicals used to manufacture illicit fentanyl that is sold in the U.S. In exchange, the U.S. has agreed to drop tariffs on China by 10 percentage points, suspend an investigation into Chinese shipbuilding practices and delay a new export restriction rule.
That’s left some observers wondering if there are more details to come.
Steve Bannon, former White House chief strategist to Trump, said that Trump and Bessent took Beijing’s “leverageable moment” to “flip the script” — though “the devil will be in the details.”
“The three most important things are, when do the exports commence, what are the details of lifting the rare earths,” Bannon said. “Number two … what chips are we talking about? When the president says, lots of [Nvidia] chips [will be sold to China] but no Blackwells, what are the details of that? Because that keeps them competitive in AI. Otherwise, they’re not competitive.”
“And number three is, it’s just kind of shocking — particularly given how the Chinese had played up Taiwan beforehand — that there was no discussion,” according to Trump. “Is there some framework that’s already been agreed to?” Bannon asked.
Even when the details are out, observers say the agreement is unlikely to amount to the “really fair and really great trade deal together” Trump touted in the days leading up to the trip. Treasury Secretary Scott Bessent, in an interview on Fox Business Thursday morning, said that the agreement he hashed out with Chinese vice premier He Lifeng in Kuala Lumpur in advance of the Trump-Xi meeting was “finished in the middle of the night last night” and that U.S. and Chinese officials “will exchange signatures, possibly as soon as next week.”
Here’s what we know so far:
China commits to soybean purchases
Bessent, speaking on Fox business Thursday morning, said that China has agreed to buy 12 million metric tons of soybeans between now and January and 25 million metric tons each year for the next three years after that. The U.S. exported nearly 27 million metric tons of soybeans to China in 2024.
Bessent also suggested China may commit to additional soybean purchases in the future.”
“Our great soybean farmers, who the Chinese used as political pawns, that's off the table, and they should prosper in the years to come,” said Bessent.
China purchased multiple shipments of American soybeans in advance of the Trump-Xi meeting, in what Trump told reporters was “a very nice gesture.” China’s Commerce Ministry did not confirm the purchase commitments, saying only that both sides had generally agreed to “expanding agricultural trade.”
China agrees to delay new rare earth export controls for a year
China’s Ministry of Commerce confirmed Thursday that it will suspend for one year the implementation of its new, sweeping export control measures that threatened to essentially give the country veto power over vast swaths of exports. Chinese rare earths are used in everything from iPhones to military equipment.
Trump described the issue as “settled,” though China hawks were warning in advance of the meeting that the fact that the country even proposed such export controls may have a chilling effect on business.
“That whole situation, that roadblock is gone now. There's no roadblock at all on rare earth — that will hopefully disappear from our vocabulary for a little while,” Trump said.
China agrees to fentanyl cooperation
Trump said that Xi will “be very strong in enforcing the fentanyl, everything having to do with fentanyl regulations internally” and will take “very strong measures against those that don’t obey.” But there appears to be no mechanism for the U.S. to ensure that China does what it’s promised.
Bessent, on Fox Business, said there will be working groups in the coming weeks that will “set very objective measures” on whether China’s commitments are “successful or not."
China’s Ministry of Commerce confirmed it had agreed to cooperate on fentanyl but offered no specifics.
China to potentially purchase American energy
Trump, in a post on Truth Social Thursday morning, said that China had “agreed that they will begin the process of purchasing American Energy” and teased that the country may even be interested in joining a trans-Alaska natural gas pipeline.
Bessent, in the Fox Business interview, said that Xi “unilaterally” brought up in the meeting “that the Chinese might like to be a part of it.”
China has not confirmed that interest.
U.S. lowering its fentanyl-related tariffs on China from 20 percent to 10 percent
Trump said the U.S. will immediately reduce the tariffs it imposed on China earlier this year because of its role in supplying precursors that have fueled the fentanyl epidemic in the U.S. from 20 percent to 10 percent, in response to China’s assurances that it will crack down on those precursors.
That will bring the tariff rate on Chinese goods down to roughly 45 percent.
U.S. postponing its investigation into Chinese shipping practices
U.S. Trade Representative Jamieson Greer, speaking to reporters on Air Force One overnight, said that the U.S. would postpone its so-called Section 301 investigation into China’s maritime, logistics and shipbuilding industries, including fees on Chinese commercial ships that enter U.S. ports, for a year.
China’s Commerce Ministry confirmed it will suspend its retaliatory port fees as well.
U.S. delays new export restrictions rule
Bessent confirmed on Fox Business that the U.S. will suspend for one year the implementation of a new rule from the Commerce Department’s Bureau of Industry and Security that targeted subsidiaries of blacklisted foreign firms. Under the rule, any entity that is at least 50 percent owned by one of those firms was slated to be subject to stringent export restrictions.
The Treasury secretary said the decision came in response to China’s move to suspend its new rare earth export controls for a year.
Trump says he hasn’t granted China access to advanced chips
Trump told reporters that he hasn’t granted China access to advanced Blackwell semiconductor chips, which support next-generation artificial intelligence and machine learning, as he had floated a day earlier. But he did say that American chipmaker Nvidia would be talking to China about selling the country more chips.
It’s not clear how advanced those chips might be, though Trump said he would be speaking to Nvidia CEO Jensen Huang about it.
“I said [to Xi], ‘That's really between you and Nvidia,’ but we're sort of the arbitrator, or the referee,” Trump said.
Trump says Ukraine was discussed, while Taiwan and Russian oil purchases weren’t
Trump said he spoke with Xi “for a long time” about ending Russia’s war in Ukraine, and that the two leaders are “both going to work together to see if we can get something done.” He also said Taiwan did not come up in his conversation with Xi, nor did China’s purchases of Russian oil.
China’s official statements have not weighed in on any of the three points.
No details on TikTok
China’s Commerce Ministry, in a statement, said it would work with the U.S. to resolve issues related to TikTok. Bessent, on Fox Business, said that an agreement on TikTok was finalized during his meetings with Chinese officials in Kuala Lumpur, something he expected would “go forward in the coming weeks and months, and we'll finally see a resolution to that."
Doug Palmer contributed to this report.
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