Wednesday | June 11, 2025
HONG KONG — The United States and China Reach Framework Agreement to Implement Trade Truce
The United States and China have reached a preliminary framework to implement their trade truce, officials from both countries confirmed on Wednesday, following two days of talks in London aimed at easing tensions and rolling back export restrictions that have threatened global manufacturing.
According to China’s lead trade negotiator, Li Chenggang, both sides agreed “in principle” on how to carry out the consensus reached during last month’s negotiations in Geneva, as well as a recent phone call between the two nations’ leaders. Li spoke to reporters in London, as reported by Chinese state broadcaster CGTN.
In a post on Truth Social, U.S. President Donald Trump declared, “Our deal with China is done,” stating that both nations had agreed to lift export restrictions as previously outlined in May’s Geneva agreement. The deal also includes a reversal of a controversial visa policy: Chinese college students will now be allowed to study in the U.S., rolling back a plan previously announced by Secretary of State Marco Rubio to aggressively revoke some student visas.
U.S. Commerce Secretary Howard Lutnick said the proposal would now be reviewed by each country’s leadership. “If approved, we will move forward with implementation,” he told reporters at a separate briefing in London, according to Reuters.
One major breakthrough in the agreement involves China’s rare earth exports—crucial to industries ranging from electronics to defense. Lutnick said that the issue would be resolved as a “fundamental” component of the framework. Trump confirmed this, stating that China would provide “full magnets, and any necessary rare earths, up front.”
Lutnick added that U.S. restrictions imposed during the dispute would likely be lifted in return. “You should expect those to come off,” he said, echoing Trump’s earlier statement that it would be done “in a balanced way.”
Previously, in response to China’s apparent backtracking on its Geneva commitments, the U.S. imposed new restrictions on the sale of chip design software to China. However, National Economic Council Director Kevin Hassett told CNBC earlier this week that Washington may consider easing limits on certain microchips essential to Chinese manufacturing. He clarified that the U.S. would continue to block exports of high-end Nvidia chips used in artificial intelligence systems.
China’s state broadcaster CCTV offered limited additional information but emphasized a message of cooperation. Vice Premier He Lifeng stated, “China reaffirmed that both sides should honor their commitments, take meaningful actions, and safeguard the progress already made.”
He added, “There are no winners in a trade war. China does not want to fight, but is not afraid to fight.”
Despite past tensions, Trump struck an optimistic tone in a separate Truth Social post, writing, “President XI and I are going to work closely together to open up China to American trade. This would be a great WIN for both countries!!!”
Meanwhile, speaking in Beijing, European Central Bank President Christine Lagarde welcomed the thaw but cautioned against aggressive trade tactics. “Coercive trade policies are not a sustainable solution,” she said. “They are more likely to provoke retaliation and cause mutually damaging outcomes.”
Export controls take center stage
The latest round of trade talks, held at the historic Lancaster House in central London, underscored how export controls have become a central battleground in the ongoing U.S.–China trade war. The discussions also spotlighted China’s significant leverage in the global rare earth supply chain — and its increasing willingness to use that advantage to pressure Washington into easing restrictions on Chinese exports.
Rare earth minerals and their magnets are vital components in products ranging from electric vehicles to fighter jets. China maintains a near-monopoly over the global supply of these materials, giving it powerful influence over key sectors of the U.S. economy and defense industry.
Following a long-anticipated phone call last week between President Donald Trump and Chinese President Xi Jinping, Trump announced that China had agreed to resume the export of rare earth minerals and magnets. However, he did not specify the volume or timeline for the resumption.
Beijing’s grip on these materials tightened in early April when it introduced new licensing requirements for certain mineral exports, a move widely seen as retaliation for U.S. tariffs. Since then, China’s shipments of rare earths abroad have dropped sharply, triggering disruptions in industries worldwide — from electronics and defense to energy and automotive manufacturing.
In response to what U.S. officials described as China’s failure to honor commitments made during May’s Geneva talks, the Trump administration has imposed a series of punitive measures over the past month. These include restrictions on U.S. companies selling semiconductor design software to China, threats to revoke U.S. visas for Chinese students, and a warning to U.S. firms against using artificial intelligence chips from Huawei, China’s top tech firm.
Beijing has pushed back strongly, accusing Washington of violating the Geneva agreement. Under the deal reached on May 12, both sides agreed to temporarily lift some of their most damaging tariffs and use a 90-day window to negotiate a broader resolution to their economic disputes.
Despite this temporary truce, China’s exports to the U.S. fell sharply — down 34.5% in May, according to Chinese customs data — prompting both nations to return to the negotiating table in London.
“The progress made during this round of talks in London is conducive to building further trust between China and the United States,” said Li Chenggang, China’s top trade negotiator and vice commerce minister, in remarks reported by CGTN. “It also helps promote the stable and healthy development of China–U.S. economic and trade relations.”
Semiconductor chokepoint
Although U.S. access to rare earths has only recently become a flashpoint, tensions over advanced technology have been simmering for years. Washington has steadily escalated efforts to curb China’s access to semiconductor-related technologies, aiming to prevent Beijing from leveraging American innovation to advance its military and artificial intelligence capabilities.
During his first term, President Donald Trump imposed targeted restrictions on Chinese tech firms like Huawei, including limits on chip sales. His successor, President Joe Biden, intensified the crackdown in 2022, citing national security concerns. The Biden administration expanded controls to cover not only advanced semiconductors but also chipmaking equipment, high-bandwidth memory chips, and even foreign-manufactured products built using U.S. technology.
These sweeping restrictions have placed intense pressure on China’s strategic technology sectors — particularly semiconductors and AI — which President Xi Jinping has identified as critical national priorities.
Despite the sanctions, Huawei, long a symbol of China’s tech ambitions, has staged a dramatic comeback. Once crippled by U.S. restrictions that nearly dismantled its smartphone business, the company stunned observers in 2023 with the launch of the Mate 60 — a smartphone powered by advanced chips the U.S. believed it had successfully blocked from Chinese access. The release prompted investigations by the U.S. government into how such technology was obtained.
In a rare interview on Tuesday, Huawei founder Ren Zhengfei played down the impact of U.S. export controls. While acknowledging that Huawei’s chips remain one generation behind U.S. technology, he rejected claims that American sanctions had significantly hobbled the company.
“The U.S. has exaggerated Huawei’s capabilities. We’re not that advanced yet,” Ren told People’s Daily, the official newspaper of the Chinese Communist Party.
Still, Ren pointed out that China could meet many of its computing needs by using chip “packaging” — a method that involves stacking or clustering multiple microchips to simulate the performance of a single advanced chip.
“There’s actually no need to worry about the chip issue,” he said. “By using methods like stacking and clustering, the computational results are comparable to the most advanced levels.”