Donald Trump has endorsed the US-China trade deal struck in London that will ramp up supplies of rare earth minerals and magnets needed for the automotive industry, saying it will take total tariffs on Beijing to 55%.
Acknowledging that his Chinese counterpart, Xi Jinping, still needed to give his final approval on the terms agreed late on Tuesday night at Lancaster House, the US president disclosed the pact would also facilitate Chinese students’ access to US colleges.
According to reports in the US, China agreed to ease the restrictions on exports of rare earths for six months only.
The 55% tariff total appears at first glance to be a hike from the 30% rate agreed in the truce struck early last month when both sides slashed triple-digit rates. However, a White House official said it merely reflected Trump’s worldwide 10% baseline “reciprocal” tariff on imports, the 20% fentanyl trafficking levy and a 25% pre-existing tariff on China.
Writing on his Truth Social platform on Wednesday, Trump said: “Our deal with China is done, subject to final approval with president Xi and me … We are getting a total of 55% tariffs, China is getting 10%. Relationship is excellent!”
After two days of negotiations in London, US and Chinese officials agreed on a framework to get their trade truce back on track and remove China’s export restrictions on the rare earth imports essential to US industries including automotive, electronics and defence, while offering little resolution to wider trade differences.
Trump added in his post that in the deal, “full magnets, and any necessary rare earths, will be supplied, upfront, by China. Likewise, we will provide to China what was agreed to, including Chinese students using our colleges and universities (which has always been good with me!)”
The US secretary of commerce, Howard Lutnick, told reporters the London “framework” put “meat on the bones” of an agreement reached last month in Geneva to ease retaliatory tariffs that had reached crushing triple-digit levels
It would, he said, allow them to “implement” the Geneva pact but was subject to the approval of Trump and Xi.
The Geneva deal had faltered over China’s curbs on critical minerals exports, prompting the Trump administration to respond with export controls of their own preventing shipments of semiconductor design software, aircraft and other goods to China.
Full details of the agreement were not immediately released and Trump has previously cancelled trade agreements he has brokered with major trading partners, including Mexico and Canada.
The London deal came as the US car industry drew close to halting production because China had choked off the supply of magnets used in windshields and doors. China has a stranglehold on the global market of rare earths and magnets and introduced curbs in April after Trump’s decision to launch a trade war.
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The trade breakthrough also came as the US released its latest inflation figures. The consumer price index (CPI) – which measures the cost of a basket of goods and services – rose to an annual rate of 2.4% in May, up from 2.3% in April.
Economists have been expecting Trump’s trade wars to increase US inflation, which remains above the 2% per year rate preferred by the Federal Reserve. Companies including Walmart, Best Buy, Ford and Procter & Gamble have all warned that the levies will be passed on to consumers.
The president has been at loggerheads with the Fed chair, Jerome Powell, urging the head of the US central bank to lower interest rates. Trump once again called on the Fed to cut rates at its next meeting, set for 17 and 18 June.
“CPI JUST OUT. GREAT NUMBERS! FED SHOULD LOWER ONE FULL POINT. WOULD PAY MUCH LESS INTEREST ON DEBT COMING DUE. SO IMPORTANT!!!” Trump wrote on Truth Social.
But economists expect the Fed to keep rate cuts on hold amid the uncertainty over trade policy. “We expect the underlying strength in the economy and uncertainty over the policy outlook to keep the Fed in ‘wait-and-see’ mode next week,” Bradley Saunders, North America economist for Capital Economics, wrote in a note to investors.
