Gyeongju, South Korea – United States President Donald Trump has announced an agreement with China to lower some US tariffs and avert Chinese export controls on rare earths, lowering the temperature in a heated trade war that has threatened to upend the global economy.
Trump on Thursday met Chinese President Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in South Korea, in the two leaders’ first face-to-face meeting since 2019.
Trump said the sides had made “outstanding groups of decisions” and their agreement would initially be for one year. He said the sides would formally sign a deal “pretty soon”.
Chinese President Xi Jinping was more measured in early remarks, reported by the country’s state media.
The Xinhua news agency quoted Xi as saying that the “economic and trade teams of China and the United States held in-depth talks and reached consensus on solutions to problems”.
Xi “called on both sides to focus on long-term benefits brought by cooperation rather than falling into vicious cycle of retaliation,” Xinhua said.
Under the trade truce, China will not go ahead with its planned export controls on rare earths, while the US will drop a threatened 100 percent tariff on Chinese goods, Trump said.
Trump said the issue of rare earths had been “settled” after the summit.
Rare earth minerals “will hopefully disappear from our vocabulary for a little while,” Trump said on Air Force One after departing South Korea.
China’s plans to require companies anywhere in the world to obtain a licence to export goods containing even trace amounts of its rare earths had raised fears of massive disruptions to global supply chains.
Chinese producers hold a near monopoly on the supply of the critical minerals, which are used to make everything from smartphones to fighter jets.
Trump said he would lower a tariff imposed in response to the flow of fentanyl from 20 percent to 10 percent after Xi agreed to “work very hard” to stop the flow of the synthetic opiate.
“I believe he is going to work very hard to stop the death that is coming in,” Trump said.
Other tariffs on Chinese goods would remain unchanged, leaving the average US tariff rate at about 47 percent.
China’s average tariff on US products stands at about 32 percent.
Shan Guo, a partner with Shanghai-based consultancy Hutong Research, said the cut in the fentanyl tariff was “largely expected”.
“China has been asking for the fentanyl cut since Stockholm, it is now getting what it wants using rare earth as leverage,” Guo told Al Jazeera, referring to US-China trade negotiations that took place in the Swedish capital in July.
“It is a 10 percent cut instead of 20, likely because US still wants to maintain some leverage as the two sides talk more going forward. Regardless, this lowered tariff on China will reduce the competitive disadvantage of Chinese goods vs ASEAN peers.” The Association of Southeast Asian Nations (ASEAN) consists of 11 regional economies, many of which are also export-oriented, like China’s economy.
Trump, who described his meeting with Xi as “amazing”, said China had also agreed to buy “tremendous amounts” of soya beans and other agricultural products.
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