On Thursday in Busan, South Korea, Donald Trump and Xi Jinping reached a high-stakes agreement aimed at stanching the escalating trade war between the world’s two largest economies — but the cautious wording and limited scope underline just how much stronger China has become since the U.S. first confronted Beijing.
The deal includes the U.S. reducing tariffs on Chinese goods from an overall rate of roughly 57 % to about 47 %, by halving the 20 % tariff tied to China’s role in supplying fentanyl precursors to 10 %. In exchange, China will pause its recent export controls on rare-earth minerals for one year and commit to purchasing at least 25 million metric tons of U.S. soybeans annually over the next three years.
According to the World Trade Organization (WTO)-style readout, Beijing will also take new steps to curb the trafficking of fentanyl precursors and will allow greater access for U.S. agricultural exports — moves intended to ease domestic pressure within the U.S. and cool global supply-chain tensions.
While markets registered a muted positive reaction, analysts cautioned the pact is better understood as a tactical truce than a strategic resolution of U.S.–China rivalry. Key flashpoints — Taiwan, advanced semiconductor export controls, and China’s military buildup — were not addressed.
Perhaps most notable is the shift in leverage: China entered the talks holding rare-earth minerals — essential for high-tech manufacturing and defence systems — giving it a bargaining chip previously unthinkable. U.S. decision-makers now face the reality that Beijing controls significant vulnerabilities in global supply chains.
For now, the agreement offers a one-year “pause” in hostilities, but the underlying rivalry remains very much alive. “Each side is calibrating tension to avoid collapse while keeping escalation on the table,” said one trade-policy expert.