U.S. and China Reach Trade Agreement to Ease Tensions and Promote Bilateral Trade

Following intense negotiations held in London on June 9 and 10, the United States and China have announced a framework agreement to redefine their trade relations and alleviate tensions that have marked the relationship between the world’s two largest economies.

This milestone, pending final approval from Chinese President Xi Jinping, aims to revitalize bilateral trade and resolve key disputes, including restrictions on rare earth exports and tariffs.

The agreement, reached after two days of discussions led by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng at Lancaster House in London, marks a significant step toward de-escalating the trade war that intensified following Trump’s April 2 announcements, dubbed “Liberation Day.”

Key Points of the Agreement

The agreed framework includes key commitments from both sides. China has pledged to supply complete magnets and essential rare earths in advance, critical materials for industries such as technology and electric vehicle manufacturing.

In return, the U.S. will facilitate the issuance of visas for Chinese students, promoting educational and cultural exchange. Although tariffs from both countries remain historically high, the agreement establishes a truce that prevents further escalation and sets a 90-day period to negotiate a more substantial pact.

U.S. Commerce Secretary Howard Lutnick expressed optimism about the agreement, stating that it “will address concerns about rare earths and magnets, strengthening global supply chains.”

Lutnick expressed optimism about the agreement.

Context of the Negotiations

The agreement comes after a month of renewed tensions, triggered by the imposition of triple-digit tariffs in April, described by Bessent as “the equivalent of an embargo.”

These measures severely impacted global supply chains, bringing trade between the two nations to a breaking point. The London negotiations, which followed a preliminary agreement reached in Geneva in May, reflect a joint effort to restore global economic stability.

President Trump, in a post on his TruthSocial account on Wednesday, stated that “the deal is done” and highlighted its positive impact on markets, which saw a rally following the announcement.

However, the truce does not resolve underlying tensions, such as technological competition and restrictions on Chinese advanced semiconductor exports, a recent point of friction following disputes over Huawei’s AI chips.

This agreement marks a step toward stabilizing trade relations, but its success will depend on future negotiations and the willingness of both parties to compromise on structural issues.