Tech Sector Breathes Easier as Rare Earth Export Controls Paused in U.S.-China Deal

The U.S. and China have reached a preliminary trade framework to avert escalating tariffs and regulatory tensions, with both sides agreeing to suspend key measures for one year, according to officials. The deal, announced ahead of a summit between President Donald Trump and Chinese President Xi Jinping at the APEC meeting in South Korea, includes the U.S. forgoing a threatened 100% tariff on Chinese goods and China delaying rare earth export controls critical to global tech and defense sectors, according to a Vocofm report. Treasury Secretary Scott Bessent described the talks as "very successful," emphasizing that the agreement would stabilize supply chains and ease economic pressures on American farmers and manufacturers, according to Bitget.

Central to the deal is the suspension of China's planned rare earth export restrictions, which had alarmed U.S. industries reliant on the minerals for electric vehicles, semiconductors, and military equipment. In exchange, the U.S. will not impose the 100% tariff, which had been set to take effect on November 1. The pause on rare earth controls will last one year while China reviews its policy, offering immediate relief to firms like Boeing and Tesla, the Hindustan Times reported. Additionally, China has committed to resuming purchases of U.S. soybeans, a critical win for Midwestern farmers who lost significant market share during the trade war. The American Soybean Association noted that China's return as a buyer could inject much-needed momentum into U.S. agriculture, the Vocofm report said.

The framework also addresses the fentanyl crisis, with Trump announcing a reduction of U.S. tariffs on Chinese goods linked to fentanyl production from 20% to 10%. This move follows assurances from Xi that China will intensify efforts to curb the export of precursor chemicals used in illicit fentanyl manufacturing. "They're going to work very hard to stop the flow," Trump stated on Air Force One after the summit, calling the discussions "an amazing meeting," MarketScreener reported. The adjustment aligns with broader efforts to balance trade relations with public health priorities, though experts caution that enforcement of China's controls remains a key test of the agreement's effectiveness, according to The Economic Times.

The deal's timing is strategic, occurring just before the November 10 deadline for a current trade ceasefire and ahead of the APEC summit. While the Trump-Xi meeting has not been officially confirmed by Beijing, sources indicate that both sides are working toward a formal agreement during the summit. The pause on tariffs and export measures provides immediate stability for global markets, which had braced for renewed volatility. Analysts note that the success of the framework will depend on follow-through from both governments, particularly regarding China's rare earth policy and U.S. export controls, The Wall Street Journal reported.