U.S. China Sign Trade Deal Amid Rare Earths Tensions

President Donald Trump announced that the U.S. and China have signed a trade agreement, although he did not provide any specific details about the deal. Commerce Secretary Howard Lutnick confirmed that the agreement was signed earlier in the week, but he also did not offer any further information. Trump mentioned the signing during a late Thursday statement, while Lutnick specified that the deal was finalized two days prior.

The announcement comes after initial talks in Geneva in early May, which led to the postponement of significant tariff increases that were threatening to halt much of the trade between the two nations. Subsequent negotiations in London established a framework for further discussions, and the deal mentioned by Trump appears to formalize this agreement. Lutnick emphasized Trump's role as a dealmaker, suggesting that more agreements are forthcoming.

China has not officially announced any new agreements, but it did reveal earlier this week that it is expediting the approval process for exports of rare earths, which are essential materials used in high-tech products such as electric vehicles. Beijing's restrictions on rare earth exports have been a major point of contention in the trade negotiations. The Chinese Commerce Ministry stated that Beijing is accelerating the review of export license applications for rare earths and has approved several compliant applications.

Export controls on these minerals have overshadowed tariffs in the latest round of trade negotiations. China imposed permitting requirements on seven rare earth elements in April, which threatened to disrupt the production of various high-tech products in the U.S. and globally. The agreement reached in May in Geneva aimed to reduce punitive tariff hikes imposed during Trump's escalation of the trade war. However, some higher tariffs, such as those related to the trade in fentanyl and duties on aluminum and steel, remain in effect.

The fluctuating policies are impacting both of the world’s largest economies. The U.S. economy contracted at a 0.5% annual pace from January through March, partly due to a surge in imports as companies and households rushed to purchase foreign goods before potential tariffs were imposed. In China, factory profits declined by more than 9% from a year earlier in May, with automakers experiencing a significant portion of that decline. They fell more than 1% year-on-year in January-May.

Trump and other U.S. officials have indicated their expectation to reach trade deals with several other countries, including India. Lutnick reiterated this sentiment, stating that more deals are on the horizon. The lack of specific details about the agreement with China leaves many questions unanswered, but the focus on rare earth exports suggests that this issue may have been a key component of the negotiations.