President Donald Trump announced on June 11 that the United States has reached a new trade deal with China. The announcement came after two days of talks between U.S. and Chinese officials at Lancaster House in London. The agreement is expected to ease trade tensions that had been building since Trump reinstated harsh tariffs on Chinese goods earlier this year.
In a post on Truth Social, Trump declared, “Our deal with China is done, subject to final approval with President Xi and me. We are getting a total of 55 percent tariffs, China is getting 10 percent. Relationship is excellent!” Trump also confirmed that China will supply “full magnets, and any necessary rare earths,” a key requirement for U.S. industries, including electric vehicles, defense, and electronics.
In return, the United States will continue allowing Chinese students to attend American colleges and universities. Trump described this part of the deal positively, saying it “has always been good with me!”
Rare Earths at the Center of the Deal
The agreement comes after China suspended nearly all exports of rare earth minerals earlier this year. China produces about 60 percent of the world’s rare earths and processes nearly 90 percent. These materials are essential for modern technologies, including smartphones, wind turbines, electric cars, and precision weapons.
The export ban caused significant problems for U.S. manufacturers. The auto industry, in particular, was nearing a shutdown due to a shortage of magnets used in vehicle systems.
Commerce Secretary Howard Lutnick said the deal “put meat on the bones” of an earlier agreement reached in Geneva. That initial deal had collapsed after China failed to deliver on rare earth shipments. The London talks were aimed at getting the trade truce back on track.
“They are going to approve all applications for magnets from United States companies right away,” Lutnick said on CNBC. “We were at mutual assured annoyance,” he added, referring to the tense state of negotiations before Trump’s personal phone call with President Xi Jinping.
Tariffs Locked at 55 Percent
As part of the agreement, the United States will maintain a 55 percent tariff on Chinese imports. This figure combines several existing tariffs: a 10 percent “reciprocal” tariff, a 25 percent tariff from Trump’s first term, and a 20 percent penalty related to fentanyl trafficking.
According to a White House official, “The 55 percent is not a new tariff. It reflects the sum of tariffs already in place.” Trump had previously imposed tariffs as high as 145 percent on Chinese goods. The new rate represents a compromise reached during the 90-day pause in April.
Lutnick confirmed that this level is final. “You can definitely say that,” he told CNBC when asked whether tariffs would change again. He emphasized that the administration is aiming for consistency to help businesses plan ahead.
Critics Warn of Higher Costs
While the Trump administration is calling this a major win, critics warn that the high tariff levels will be felt by American consumers and small businesses. Companies like Walmart have already said they will have to raise prices. “We aren’t able to absorb all the pressure given the reality of narrow retail margins,” said CEO Doug McMillon during an earnings call.
Cassie Abel, the founder of outdoor clothing company Wild Rye, said the deal does not help smaller firms that depend on Chinese suppliers. “It is devastating. Fifty-five percent tariffs are still insane,” she told reporters. “It’s really hard to find a container. The chances of getting our product out of China within the 90-day window is basically zero.”
The Main Street Alliance, a group that represents small business owners, called the agreement “a death sentence” for companies that rely on Chinese materials.
Questions Around Forced Labor and Sourcing
The trade deal also comes amid new reports of forced labor in China’s Xinjiang region. A report from the Netherlands-based Global Rights Compliance group identified 77 companies operating in Xinjiang’s mineral sector, including producers of titanium, lithium, beryllium, and magnesium. These materials are used in a wide range of products, from paint to aerospace components.
The report linked several global brands, such as Walmart, Coca-Cola, and Nescafe, to supply chains that may include forced labor. It said, “Mineral mining and processing in Xinjiang rely in part on the state’s forced labor programs for Uyghurs and other Turkic people in the region.”
In response, China’s Foreign Ministry rejected the accusations. “The so-called allegation of forced labor in China’s Xinjiang region is nothing but a lie concocted by certain anti-China forces,” said spokesperson Lin Jian.
The White House has not said whether this issue will affect the rare earths deal. Under U.S. law, imports from Xinjiang are banned unless companies can prove their goods were not made with forced labor.
What Happens After the 90-Day Truce?
The 90-day pause in tariffs that began on April 2 is set to expire on July 8. So far, the United States has only reached confirmed trade deals with the United Kingdom and China. White House Press Secretary Karoline Leavitt said that many more deals are expected soon.
“We just want to make sure they’re the best deal we possibly can make. We don’t want to rush, and Donald Trump is never going to accept the rush,” said Secretary Lutnick.
National Economic Council Director Kevin Hassett said that “many, many deals” are coming and mentioned that three are nearly complete.
Trade talks with India are still underway, and Trump has said that if more countries do not sign deals soon, new tariffs will be applied.
Inflation, the Fed, and the Bigger Picture
The deal also comes as inflation remains slightly above the Federal Reserve’s preferred 2 percent rate. The consumer price index rose to 2.4 percent in May. Trump used the release of inflation data to call on the Fed to cut interest rates by a full percentage point. “CPI JUST OUT. GREAT NUMBERS! FED SHOULD LOWER ONE FULL POINT,” Trump posted.
However, economists are cautious. “We expect the underlying strength in the economy and uncertainty over the policy outlook to keep the Fed in ‘wait-and-see’ mode next week,” wrote Bradley Saunders of Capital Economics.
Final Approval Still Pending
Although Trump and Chinese officials have announced the framework of the agreement, the deal is still waiting for formal approval by both leaders. Given the fragile nature of past trade truces, businesses are watching closely to see whether the promises are kept.
“President Xi and I are going to work closely together to open up China to American trade,” Trump said in a follow-up message on Truth Social.
NP Editor: There are those of us who are still wary of doing deals with China. This looks like almost everything that we wanted, but perhaps it was too easy, and, of course, China still attacks us covertly and mercilessly. But we at NP trust that Trump understands that there are still battles to be fought – the trade war portion could be coming to a close.
