President Donald Trump and Chinese President Xi Jinping reached a temporary trade truce in South Korea on Thursday, defusing a growing standoff over rare earth elements that had threatened to deepen tensions between the world’s two largest economies.
Under the agreement, China will suspend for one year the export controls on rare earths it imposed earlier this month, while the United States will reduce tariffs and delay sanctions on certain Chinese companies. Trump described the deal as “a one-year agreement that will be very routinely extended,” signaling optimism that the fragile truce could evolve into a longer-term understanding.
“We have a deal,” Trump told reporters aboard Air Force One. “Now, every year we’ll renegotiate the deal, but I think the deal will go on for a long time, long beyond the year. But all of the rare earth has been settled, and that’s for the world.”
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The move marks a pause in a trade confrontation that had escalated rapidly after China, which controls about 70% of global rare earth production, announced sweeping export restrictions on October 9. The minerals are vital to manufacturing advanced technologies, including semiconductors, defense systems, and electric vehicles — sectors where the United States has sought to curb Chinese dominance.
As part of the truce, Trump said he is cutting tariffs on Chinese goods tied to fentanyl production from 20% to 10%, bringing the overall average rate on Chinese imports down to about 47%. The White House had earlier threatened to impose tariffs of up to 100% on November 1 in retaliation for Beijing’s rare earths policy.
China’s Ministry of Commerce confirmed that the U.S. has agreed to postpone implementation of a September 29 rule blacklisting subsidiaries of major Chinese state firms. Both sides also agreed to suspend port docking fees for ships traveling between the two countries for one year.
Trump added that he plans to visit China in April 2026, while Xi will make a return visit to the United States — either to Palm Beach, Florida, or Washington, D.C. — later in the year.
Beijing Seen Gaining the Upper Hand
Analysts quoted by CNBC say Beijing may have leveraged its rare earths dominance to secure tariff relief from Washington.
“Xi was ready for Trump in his second term and has a powerful weapon in rare earths,” Piper Sandler analysts led by Andy Laperriere wrote in a client note. “China is getting the better of the U.S. in these recent truce negotiations.”
Wolfe Research strategist Tobin Marcus said China “successfully used rare earths export controls and a soybean embargo” to pressure Washington into concessions.
Despite the relief, some U.S. observers warn the deal lacks substance. Nicholas Burns, who served as U.S. ambassador to China during the Biden administration, described the outcome as “an uneasy truce in a long, still simmering trade war.”
Unclear Terms on Agriculture and Energy
The agreement leaves open key questions about agriculture and energy trade. Trump said China has committed to buying 25 million metric tons of soybeans annually for the next three years, along with sorghum and other farm goods — a significant boost for U.S. farmers. Treasury Secretary Scott Bessent confirmed the purchase figure, but China’s Ministry of Commerce gave no details, merely stating that both sides “agreed to expand agricultural trade.”
Trump also hinted that China could increase purchases of U.S. oil and gas, particularly from Alaska, pending further negotiations between Energy Secretary Chris Wright, Interior Secretary Doug Burgum, and Chinese officials.
Nvidia and Tech Cooperation
The truce also included preliminary discussions on semiconductor technology. Trump said he and Xi talked about exports of Nvidia chips to China, but not about the company’s most advanced Blackwell graphics processing units.
“That’s really between you and Nvidia,” Trump told Xi, adding that Washington would act as a “sort of arbitrator.”
China’s Commerce Ministry later said it would work with the U.S. to “resolve issues related to TikTok,” but provided no details.
A Tactical Pause, Not a Breakthrough
The agreement gives both leaders breathing room as they navigate domestic and geopolitical pressures. It provides a temporary easing of trade-related inflationary pressures and a political win ahead of the 2026 midterms for Trump. While for Xi, it secures continued access to the U.S. market while keeping China’s grip on the global rare earths supply chain intact.
However, experts caution that without structural commitments, the truce may prove short-lived.