Background of the Trade Tensions

The trade conflict resurfaced early in President Donald Trump’s second term, when he announced in February 2025 a sweeping tariff package targeting most major trading partners — including China, which was hit with the highest rates.

Beijing responded with reciprocal measures and import restrictions, sparking a new wave of economic tension between the world’s two largest economies.

The escalation prompted warnings from the World Bank, which projected a global contractionary effect and an estimated 1.8% rise in U.S. inflation due to the new tariffs.


Economic De-escalation Meeting in South Korea

To contain the growing trade friction, U.S. President Donald Trump and Chinese President Xi Jinping met in South Korea, where both sides agreed on what analysts described as a preliminary or temporary truce.

The agreement outlined broad principles and detailed steps aimed at reducing trade tensions, including:

  • Easing the tariff war between Washington and Beijing.
  • Lifting restrictions on China’s export of rare earth elements and industrial magnets to the U.S.
  • Resuming Chinese purchases of U.S. soybean oil and other agricultural goods.
  • Avoiding U.S. tariff escalation to 100% on Chinese exports.

The economic ceasefire, with its detailed terms, is set to remain in effect for one year.


Key Details of the Trump–Xi Agreement

Tariff Reductions and Fentanyl-Related Goods

The United States will cut tariffs by 20% on Chinese goods related to opioid precursor chemicals used in the production of fentanyl.

This reduction — bringing tariffs first imposed in February down to 10% — lowers the average U.S. tariff rate on Chinese imports from 57% to about 47%, according to U.S. officials.

These rates include:

  • The 25% tariffs imposed during Trump’s first term.
  • A reciprocal 10% tariff adjustment introduced in April.
  • The existing “most favored nation” baseline rates previously published by the White House.

Suspension of China’s Export Controls on Rare Earths

In exchange, China agreed to suspend export restrictions for one year on rare earth elements and industrial magnets, announced earlier this month.

These materials are critical for the production of electric vehicles, aircraft, weapons systems, and advanced electronics — giving Beijing a powerful economic lever in its trade rivalry with Washington.

The White House confirmed that China will issue general export licenses for rare earth products — including gallium, germanium, antimony, and graphite — for end-users and suppliers in the United States.

This effectively constitutes a rollback of China’s export curbs enacted in April 2025 and October 2022.

Removal of Chinese Counter-Tariffs

China also agreed to suspend all retaliatory tariffs imposed since March 4, including duties on:

  • Poultry, wheat, corn, cotton, sorghum, soybeans
  • Pork, beef, seafood, fruits, vegetables, and dairy products

Additionally, Beijing pledged to suspend all non-tariff retaliatory measures, including removing several U.S. companies from its “unreliable entity list” and end-user restrictions.


Export Control Pause and Blacklist Suspension

The U.S. Commerce Department will freeze for one year its expanded blacklist of Chinese technology companies banned from purchasing American semiconductor equipment.

This move aims to limit enforcement actions that previously restricted thousands of firms linked to existing sanctioned entities.


Resumption of China’s Soybean Purchases

The White House confirmed that China will purchase no less than 12 million metric tons of U.S. soybeans in the final two months of 2025, and at least 25 million metric tons annually for the following three years.

China will also resume imports of U.S. sorghum and hardwood logs, after nearly halting purchases in favor of Brazilian and Argentine supplies.

Analysts noted that these commitments will only return China’s soybean imports to pre-trade-war levels — around 27 million tons in 2024 — far below the targets promised in the “Phase One Deal” of 2020.


Semiconductor and Tech Sector Measures

China also agreed to facilitate trade resumption through Nexperia, a Dutch-based semiconductor manufacturer owned by Wingtech Technology, partly state-owned and listed on the Shanghai Stock Exchange.

This move allows the flow of legacy chips to global markets to continue uninterrupted.

Additionally, Beijing will extend market-based tariff exemptions for U.S. imports until December 31, 2026, and terminate ongoing anti-dumping and antitrust investigations targeting American semiconductor firms.


Port Tariff Suspension

China agreed to lift measures imposed in retaliation for Washington’s Section 301 investigation into Chinese dominance in shipbuilding and logistics.

In return, the Trump administration will suspend for one year newly imposed port fees on Chinese-built and Chinese-flagged vessels.

The port fees, which came into effect on October 14, alongside a 100% tariff on Chinese ship-to-shore cranes, had disrupted cargo flows and increased container shipping costs.


Fentanyl Cooperation

The White House said that China has committed to concrete steps to curb the flow of fentanyl to the United States — including restricting exports of high-toxicity precursor chemicals and imposing tighter controls on shipments of other substances globally.

U.S. Treasury Secretary Scott Bessent told Fox Business that both countries will establish joint task forces to measure tangible progress in reducing synthetic opioid trafficking, which has been blamed for tens of thousands of overdose deaths annually in the United States.


EcoPulse24 Analysis

The agreement represents a mutual economic necessity for both superpowers, easing technology and industrial restrictions on China while reopening U.S. markets for a full year.

It provides a temporary lifeline for American farmers and offers major corporations on both sides relief from trade barriers in agriculture, manufacturing, and technology.

For the United States, the deal delivers a strategic win — breaking through China’s rare-earth export barriers that underpin much of America’s high-tech economy.

Meanwhile, China’s neighboring economies are likely to benefit from renewed industrial flows and regional supply-chain activity.

However, analysts caution that the truce remains temporary and tactical, not a long-term solution.

It may give both nations short-term breathing space to stabilize inflation and rebuild reserves — but it also keeps the door open for a renewed escalation if progress stalls in 2026.