In a significant move to ease ongoing trade tensions, the United States and China have agreed on a framework to revive their fragile tariff truce and lift restrictions on key exports. The deal, reached after two days of intense negotiations in London, addresses one of the most contentious issues—China’s curbs on rare earth mineral exports. U.S. Commerce Secretary Howard Lutnick said the agreement provides substance to the earlier Geneva consensus and removes barriers that had disrupted global supply chains. However, both nations must now seek approval from their respective presidents—Donald Trump and Xi Jinping—before the agreement can be fully implemented.

The breakthrough comes amid growing economic pressure and uncertainty. China’s overall exports to the U.S. plunged by 34.5% in May, the sharpest drop since the COVID-19 outbreak, while the World Bank downgraded its global growth forecast for 2025, citing tariff-related disruptions. Though the framework includes mutual easing of export controls—including those on U.S. semiconductor design tools and Chinese rare earth magnets—the resolution stops short of addressing fundamental differences over Trump’s unilateral tariff policies and China’s state-driven trade model. Experts warn the truce could be short-lived if a broader, more detailed agreement isn’t reached by the August 10 deadline.

Despite the tentative progress, markets reacted with caution. While Asian stocks edged up modestly, analysts emphasized the importance of implementation details, particularly the volume of rare earths allowed into the U.S. and the freedom for American high-tech goods to reach China. Meanwhile, several Chinese rare earth firms have already begun receiving export licenses, signaling a potential softening in Beijing’s stance. Still, lingering legal and geopolitical friction remains, with a U.S. court upholding Trump’s suspended tariffs and global business groups lobbying Washington to avoid further economic confrontation.