Experts say the deal reflects Washington's growing concern about vulnerabilities in semiconductor and electronics production. Rare earth minerals are crucial for chipmaking According to experts, this deal reflects Washington's growing concern about vulnerabilities in semiconductor and electronics production. Rare earth minerals are essential for chip manufacturing and clean-energy technology. Key issues regarding Taiwan, transshipment, TikTok, and chips remain unresolved. Consequently, the risk of misunderstanding at the policy level is high.
Highlights
<p>Tariffs on China to be reduced from 57% to 47%</p>
China to buy more agricultural products from the US
<p>Restrictions on export of some rare earth minerals continue</p>
US President Donald Trump and Chinese President Xi Jinping agreed on a limited trade deal in Busan, South Korea, on Thursday, October 30, 2025. The agreement will reduce overall tariffs on China from 57% to 47%. In return, Beijing promised to buy more US agricultural products, particularly soybeans, which were America's largest agricultural export in 2024 ($24.5 billion). China also promised to continue exporting rare earth minerals for at least one year.
After the agreement, President Trump told reporters aboard Air Force One while returning home that the US would reduce the tariffs imposed on China as punishment for selling chemicals used to make fentanyl from 20% to 10%. Trump gave the agreement a 12 on a scale of 0 to 10. He will visit China next April, and Xi will visit the US shortly thereafter.
No word on Nvidia's new chip
The US President said they also discussed exporting more advanced computer chips to China, and that Nvidia would be in talks with Chinese officials. Shortly before the meeting, he had said he might discuss Nvidia's cutting-edge artificial intelligence Blackwell chips with Xi, but ultimately said the issue did not come up. He said, "China is going to talk to Nvidia and others about buying chips, but we're not talking about Blackwell." A day earlier, Trump had praised the Blackwell chip, calling it "super-duper." His comments helped Nvidia's market cap surpass $5 trillion.
Agreement for only one year
For the first time, the two countries appeared to be on the same page on stricter export controls. Beijing said in a statement that it would suspend export controls on rare earth minerals for one year. In return, the US would also suspend for one year a rule announced in September that prohibited Chinese companies from purchasing certain American technologies. According to Trump, the agreement would be renewed after one year.
China had banned the export of rare earth elements in response to Trump's aggressive tariffs. Now, both sides have agreed that neither side wants to risk disrupting the global economy in a way that could jeopardize their own country's future.
Trump said that barriers to the export of strategically important goods would be eliminated and could be renewed annually. He said that China would significantly increase its purchases of soybeans from the US. However, on this issue, Beijing only stated that the two sides had reached a consensus to increase agricultural trade. Beijing also said that both sides would stop port fees targeting each other's shipping sector.
At the start of the meeting, Xi read a prepared statement, emphasizing a desire to work together despite differences. He said, "Given different national circumstances, we do not always agree with each other. Occasional disagreements between the world's two largest economies are normal. But economic and trade ties should remain the support and engine of China-US relations, not a stumbling block or a point of contention."
According to a statement issued by the Chinese government, Xi also pointed to the consensus reached on resolving key economic and trade issues. He urged both sides to refine and finalize further work as soon as possible, maintain consensus, and deliver concrete results.
America's concern is visible from the deal
The two leaders met in the South Korean port city of Busan. Despite the roughly 100-minute meeting, the potential for major tensions remains between the world's two largest economies. Both countries are seeking to establish themselves in manufacturing, develop new technologies like artificial intelligence, and shape global issues like the Ukraine-Russia war.
According to Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), a New Delhi-based think tank, the deal reflects Washington's growing concern about vulnerabilities in semiconductor and electronics production. Rare earth minerals are essential for chipmaking and clean-energy technology. These are sectors where China's dominance makes the US vulnerable.
However, Beijing also believes that US dependence extends beyond rare earths. It extends to green-energy inputs, pharmaceutical ingredients (APIs), and mass-market consumer goods. This will give China multiple ways to exert its influence even after tariff reductions.
Tariffs won't hurt China, but India's exports decline
According to Srivastava, the tariffs haven't hurt China. China's exports to the US increased from $28.8 billion in May 2025 to $34.3 billion in September 2025. Weak domestic manufacturing in the US and China's cost advantage have kept US buyers dependent on Chinese supplies.
In contrast, India's exports to the US fell 37% during this period, dropping from $8.8 billion to $5.5 billion. Other Asian countries with less tariff exposure have taken India's market share. Asked whether the reduction of tariffs on China will further impact Indian exports, Srivastava said, "I don't think so. The 50% tariff on India is enough reason for the decline."
Four issues remain unresolved, including Taiwan.
Louise Lu, head of Asia economics at economic advisory firm Oxford Economics, said that while the talks are a positive step towards stabilising relations between the two countries for the time being, the core issues of the four “Ts” – Taiwan, transshipment, TikTok and technology (chip) – remain unresolved.
According to Lewis, “Today's success sets the stage for deeper and more optimistic engagement in 2026. This could culminate in another presidential-level meeting in early April 2026. Before that, top US business leaders will gather in Beijing for the China Development Forum in March.” He believes the outcome of the talks could lead to a modest increase of 0.1-0.2 points in China's growth forecast for 2026.
The risk of misunderstanding is high
Lewis has another doubt. She says, “Recent history suggests that the risk of misunderstanding at the policy level is high. China's advantage in processing rare earths and critical minerals will continue to be a hurdle from time to time.”
Alicia Garcia Herrero, Chief Economist (Asia Pacific) at global market research firm Natixis, feels similarly. She considers this not a deal, but a treaty with hidden risks. She explains, China has eased the export ban on five rare earth elements announced in October. The export controls imposed in April on seven such elements remain in place. These include gallium and germanium, used in the defense and semiconductor industries. In other words, Trump has failed to restore the status quo on the rare earth issue. In the event of a future dispute, China will have the flexibility to take a firm stance.
According to Alicia, China also received less from this deal than expected. Xi Jinping wanted US assurances on the Taiwan issue, which did not materialize. He also failed to secure the lifting of US sanctions on Nvidia's latest chip, the Blackwell B30A. The one-year term of the treaty also weakens it. Based on past events, either side could withdraw at any time.
Prior to the Trump-Xi Jinping meeting, officials from both countries met in Kuala Lumpur earlier this week to prepare for the meeting. China's trade negotiator, Li Chenggang, subsequently stated that they had reached a preliminary agreement. This statement was confirmed by US Treasury Secretary Scott Bessant, who said it was a very successful framework. Before Thursday's meeting, Trump posted on TruthSocial that the meeting would be a G2. This was, in effect, a US acknowledgement of China's status as the world's second-largest power.
