BUSAN, South Korea – October 30, 2025 — United States President Donald Trump has announced that the U.S. and China have reached a one-year trade agreement following what he described as “amazing” talks with Chinese President Xi Jinping. The deal, which includes tariff reductions and the resolution of the rare earths dispute, marks a temporary truce in a trade war that has rattled global markets for years.

The two leaders met on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in South Korea, marking their first in-person encounter since 2019.

A Breakthrough in the U.S.-China Trade Standoff

Trump revealed that the agreement includes several “outstanding groups of decisions,” designed to de-escalate trade tensions and provide breathing room for both economies. The accord, which will be formally signed “soon,” is set to last for one year while further negotiations continue.

Under the terms of the truce, China will suspend its planned export controls on rare earth minerals, while the United States will reduce tariffs on a range of Chinese goods. Trump confirmed that the U.S. will withdraw a proposed 100 percent tariff on Chinese imports.

“The issue of rare earths is settled,” Trump told reporters aboard Air Force One after leaving South Korea. “Rare earths will hopefully disappear from our vocabulary for a little while.”

Rare Earths Dispute Resolved

The rare earths dispute had been a major flashpoint between the two superpowers. China’s earlier plan to impose export restrictions on companies dealing with rare earth materials—vital for manufacturing smartphones, electric vehicles, and military technology—had sparked fears of a global supply chain disruption.

Given China’s near-monopoly on rare earth production, the potential export curbs were viewed as a powerful bargaining chip. The new agreement is expected to stabilize key technology and defense industries, providing relief to manufacturers worldwide.

Xi Jinping’s Response: “Focus on Cooperation”

While Trump’s remarks were celebratory, Chinese President Xi Jinping took a more measured tone. According to Xinhua News Agency, Xi emphasized that both nations’ economic teams had conducted “in-depth talks and reached consensus on solutions” to trade challenges.

Xi urged both countries to “focus on long-term cooperation rather than retaliation,” signaling Beijing’s desire for stability amid growing geopolitical competition.

Tariff Reductions and Fentanyl Clause

As part of the deal, Trump announced that the U.S. will lower tariffs linked to fentanyl imports from 20 percent to 10 percent. This concession followed Xi’s pledge to crack down on the flow of fentanyl, a synthetic opioid that has fueled America’s drug crisis.

“I believe he is going to work very hard to stop the death that is coming in,” Trump said.

Other tariffs on Chinese goods will remain unchanged, maintaining the average U.S. tariff rate at around 47 percent, while China’s average tariff on American products will stay near 32 percent.

Expert Analysis: China Gains Leverage Through Rare Earths

Shan Guo, a partner at Shanghai-based consultancy Hutong Research, described the U.S. tariff cut as “largely expected.” She noted that Beijing had long pushed for the reduction during earlier rounds of talks.

“China has been asking for the fentanyl tariff cut since the Stockholm negotiations,” Guo explained. “It’s getting what it wants now, using the rare earth issue as leverage.”

Guo added that while the tariff cut is modest, it still helps reduce the competitive disadvantage Chinese exports face compared to other ASEAN economies.

Agricultural Purchases and Next Steps

Trump also revealed that China has agreed to buy large quantities of U.S. agricultural products, including soybeans and corn, offering a potential boost to American farmers.

The agreement is seen as a temporary reset in U.S.-China economic relations, but analysts caution that underlying structural disputes—ranging from technology transfer to intellectual property protection—remain unresolved.

Still, the Busan meeting is being hailed as a diplomatic breakthrough that eases tensions between the world’s two largest economies, at least for the next year.