Donald Trump and Xi Jinping met in Busan, South Korea earlier today, solidifying an agreement which sees both sides lessen economic sanctions that have been hurting the economies of both nations.
The Deal
The Trump Administration agreed to decrease fentanyl-related tariffs from 20% to 10%, making the average tariff rate on Chinese exports around 47%, according to The President. The U.S. also agreed to postpone the implementation of a September rule that added export restrictions to certain subsidiaries of blacklisted Chinese companies.
In return, China agreed to delay their broad-sweeping export controls on rare earth elements from October 9th, immediately resume the purchase of American soybeans, and take “very strong action” against exports of chemicals used to make fentanyl from their nation, according to President Trump..
The two sides also agreed to a one-year pause on docking fees each nation had previously implemented against each other’s ships.
President Trump was ecstatic about the result of the meeting. “Overall, I guess on the scale from zero to 10, with 10 being the best, I would say the meeting was a 12”.
The agreement is a huge win for American soybean farmers, who have been suffering tremendously after China, the world’s largest purchaser of soybeans, ceased all purchase of American soybeans in May.
According to U.S. Treasury Secretary Scott Bessent, China will buy 25 million metric tons of soybeans from the United States for the next three years.
The delay of China’s export controls on military-related rare earth elements is also a boon for the United States, who relies almost exclusively on China for its supply of them. The Trump Administration has been taking steps to ramp up rare earths production outside of China, but it will take time before the U.S and its other trading partners can supply their own demand.
While the agreement does lessen trade tensions, it in no way erases them. Both sides still have a litany of economic sanctions levied against each other.
It is also notable that China’s pause of their rare-earth export controls is only set to last one year. A reintroduction of the policy would immediately reinflame tensions between the superpowers.
President Trump indicated that the nations intend to renegotiate the agreement next year.
