Trump hails ‘lasting’ deal with Xi, dangles more possible tariff cuts
Agreement pauses rare earth restrictions and lowers some levies, but analysts warn key disputes remain unresolved
Just back from his whirlwind Asia tour, US President Donald Trump on Friday hailed a newly negotiated trade deal with China as a “long-lasting” victory even as he teased the possibility of more tariff concessions.
“The deal with China is going to be wonderful. It’s going to be long lasting,” Trump said, crediting his personal rapport with Xi for the success. “I got along with President Xi very well … The meeting with China was incredible.”
“The rivalry’s structural fault lines remain intact,” said Han Lin, Shanghai-based China managing director with the Asia Group. “Unsurprisingly, both leaders are playing to their bases, not building lasting peace.”
Thursday’s pact, building on a framework announced earlier in the week, averts a threatened escalation in the trade war and secures a pledge by China to buy at least 25 million tons (22.68 million metric tonnes) of US soybeans annually for the next three years, along with sorghum and other farm products.
Trump has boasted that the deals made in Asia are bringing in “over US$3 trillion really, in profit”, telling farmers to “go out and buy larger tractors and more land” in anticipation of the windfall.
After reaching a 15-month high on trade-deal optimism a day earlier, soybean futures slipped Wednesday as US farmers took profits from the previous session’s rally.
In return, the US cut fentanyl-related tariffs on Chinese imports from 20 per cent to 10 per cent, framing it as an incentive for Beijing to curb illicit opioid production.
“I’ve given China great incentives to hold down the fentanyl, get rid of it,” Trump said on Friday, noting its medical uses while blasting its illicit trade.
“I really believe that they have an incentive,” he added. “I’d love to get rid of the extra 10 per cent.”
The president’s apparent willingness to make more concessions, at least for now, marks a pivot from his tariff-heavy strategy.
Trump insisted the deal’s strength lies in the personal rapport between top leaders – and his own intelligence.
“I think for a long period of time, we have a smart president. We have a great relationship. If we don’t have a smart president – which is also a very strong possibility – then we won’t have a great relationship,” he said.
But analysts outlined several areas of potential concern about the US-China deal, including the lack of any detailed written account of its terms.
While China has pledged to “work very hard” at stemming the flow of fentanyl ingredients, in Trump’s words, no specifics have been disclosed involving what China might do beyond what it has already.
This is hugely consequential given that Beijing’s evident pledge on fentanyl is the basis for a 10 percentage point reduction in overall US tariffs on Chinese goods – to 47 per cent from 57 per cent.
The deal also suspended US tariffs on Chinese imports set to hit November 1 for rare earth minerals and November 10 for “reciprocal” tariffs. Unclear, however, is how long the pause will last, whether it extends for 90 days as Trump has done repeatedly in the past, or has a longer tenure.
The two sides also appeared to have a different take on what was agreed to regarding China’s rare earth export restrictions, essential for US hi-tech manufacturing of everything from food processors to military jets.
Trump has met his match with China, which has shown that two can play at this game
“Both sides are seeking to reduce their dependence on the other, and extend the other party’s dependence,” said Michael Hirson, practice head at 22V Research and a former financial attaché with the US embassy in Beijing.
“This tussle is particularly intense in rare earths and semiconductors.”
While Trump said the “rare earth issue has been settled”, Beijing has focused on the pause’s one-year time frame, highlighting the continued leverage it holds over the US.
“It’s welcome news that Beijing agreed to hold off implementing its recently announced sweeping rare earth export restrictions, but we should expect Beijing to use this threat as a hammer over the US’ head,” said Wendy Cutler, senior vice-president at the Asia Society Policy Institute.
“Trump has met his match with China, which has shown that two can play at this game,” added the former deputy US trade negotiator.
Indeed, both sides have kept their trade ammunition handy, underscoring the lack of trust and the highly delicate nature of the truce.
Trump could quickly raise tariffs again if he believes China is not complying with the terms of Thursday’s deal.
Somewhat surprising, some analysts said, was the lack of a deal in South Korea on an “ownership transfer” of the short video platform TikTok, which had been teed up as a likely deliverable, indicating there may be more problems hammering out terms than suggested.
Elsewhere, Trump wrote on social media that China committed to buying energy products. Yet this was not mentioned in the Chinese readouts.
Also unclear was whether Trump promised Beijing it would ease export restrictions on high-end US semiconductors, a move that many in US national security circles believe would cede a key US technological advantage to America’s primary rival.
“His potential willingness to allow Nvidia to sell the B30A – a chip designed for China’s market and substantially more advanced than the H20 chip that Beijing has disdained – aroused a sharp reaction … in US policy circles, especially among China hawks,” Hirson said.