Following the conclusion of a two-day negotiation held in London, representatives of the United States and China announced that the countries have reached a “framework” trade agreement, which is now awaiting approval from both President Trump and President Xi Jinping.
This “framework” agreement aims to implement the Geneva trade deal announced in May 2025 (see our report here) and the phone call between the two presidents held last week. Since this agreement is still pending approval from both sides, details of the agreement are yet to be released. However, reports indicate that this agreement could lead to the United States softening its export restrictions on advanced technologies such as jet engines and semiconductors to China, and China easing its restrictions on rare earths exports in return.
With respect to concessions on tariffs, President Trump said the United States will impose 55 percent tariffs on goods from China, and China will put in place 10 percent tariffs against U.S. goods. According to a White House official, the 55 percent tariff represents the sum of the baseline 10 percent reciprocal tariffs, the 20 percent tariffs on all Chinese imports to combat fentanyl trafficking and migration, and the pre-existing 25 percent levies on imports from China that were put in place during President Trump’s first term under Section 301. Presumably, the 25 percent 301 tariffs will apply only to the specific products that are currently subject to the same. Although the agreement has yet to be finalized, Secretary Lutnick stated that the tariffs against China will not change from this point onwards.
On the heels of the announcement of the “framework” agreement, China announced this afternoon that it is placing a six-month cap on export licenses for rare earths to U.S. automakers and manufacturers. This announcement is expected to provide China with additional leverage in the ongoing trade discussions with the United States.
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