US-China Trade Deal – “Historic” but can it deliver the goods?

Leave a CommentUS-China Trade Deal – “Historic” but can it deliver the goods?Commentary
On June 11, 2025, President Donald Trump announced a new US-China trade framework via Truth Social, heralding it as a “historic” deal pending final approval with Chinese President Xi Jinping. This agreement, following negotiations in London on June 9, builds on the May 12, 2025, 90-day tariff truce, aiming to stabilize $600 billion in bilateral trade while addressing critical issues like rare earth minerals and trade imbalances. The deal showcases Trump’s dealmaking prowess, securing asymmetrical tariffs favoring the U.S. and ensuring access to vital resources, but its provisional nature and high remaining tariffs raise concerns about long-term economic stability. This article examines the new terms, tariff structure, and implications for American interests.

New Terms of the Trade Framework

The framework, described as a “handshake” agreement requiring approval from Trump, Xi, and Congress, emerged from talks between U.S. Commerce Secretary Howard Lutnick, Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer, and Chinese Vice Premier He Lifeng. Its key provisions include:
  • Tariff Structure: The U.S. will impose a 55% tariff on Chinese imports, combining a 10% baseline tariff on all foreign goods, a 20% tariff tied to China’s role in fentanyl precursor exports, and a 25% additional duty. China will apply a 10% tariff on U.S. exports, maintaining the May 14, 2025, reduction from 125%. This asymmetry—55% vs. 10%—gives the U.S. leverage, per Trump’s June 11 Truth Social post.
  • Rare Earths and Magnets: China committed to supplying “full magnets” and “any necessary rare earths” upfront, addressing U.S. supply chain vulnerabilities. A Chinese rare earths magnet producer confirmed export licenses to the U.S., with restrictions loosened for six months, ensuring access to materials critical for batteries, weapons, and electronics.

  • Chinese Students in U.S. Colleges: The U.S. will allow Chinese students to attend American universities, reversing prior restrictions. Trump called this “always good with me,” signaling a cultural and economic olive branch.

  • Trade Rebalancing: The framework aims to boost U.S. exports to China, echoing the 2020 Phase One deal’s $200 billion purchase commitment. Specific targets remain unclear, but the U.S. seeks to narrow the $300 billion trade deficit.
  • Implementation Mechanism: Both sides agreed to a consultation framework to execute the Geneva Agreement’s terms and negotiate further, with Lutnick calling it a “first step” toward positive trade relations.
The deal does not alter pre-April 2025 tariffs, including Section 301 and 232 duties, Most Favored Nation tariffs, or the end of the “de minimis” exemption for low-value Chinese shipments. USMCA tariffs (25% on autos, steel, aluminum) and China’s earlier non-tariff measures, like a March 2025 blacklist of U.S. firms, remain intact.

Context: From Tariff War to Framework

The framework follows a volatile trade war ignited by Trump’s February 2025 tariffs, starting at 10% on Chinese imports and escalating to 145% by April, citing fentanyl and trade deficits. China’s 125% retaliatory tariffs crippled trade, slashing U.S. imports from China by 21% in April and sparking factory closures in China. The May 12 truce reduced U.S. tariffs to 30% and China’s to 10%, buoying markets (Dow up 2.8%) and easing consumer price hikes (from 15% to 2% for some goods). The June 9 London talks, described as “candid” by China’s Li Chenggang, built on this truce, with Trump’s June 11 announcement framing it as a win for “economic nationalism.”
Implications for the U.S.
From a center-right perspective, the framework is a strategic coup, securing a 55% tariff rate—five times China’s 10%—while ensuring rare earth access, critical for national security and reducing U.S. dependency by an estimated 30% in key industries. The fentanyl tariff underscores Trump’s focus on the opioid crisis, appealing to GOP voters. Allowing Chinese students supports U.S. universities, a $15 billion economic driver, aligning with conservative free-market principles.
However, the 55% tariff, while lower than 145%, keeps costs high, with households facing an estimated $1,200 annual hit in 2025, down from $2,800 pre-truce. Businesses like Ford, reliant on Chinese components, face ongoing supply chain risks, and small exporters to China struggle with even 10% tariffs. The deal’s provisional status—pending Xi’s approval and congressional ratification—introduces uncertainty, with a July 9 deadline looming if talks stall. China’s “dual circulation” strategy, emphasizing domestic production, may limit U.S. export gains, per posts on X noting Beijing’s “psychologically stronger position.”

Political and Global Impact

The deal strengthens Trump’s 2026 midterm narrative, positioning Republicans as champions of American workers while defending a 220-215 House majority and 20 Senate seats. The GOP can tout tariff leverage and rare earth security, though Democrats may argue Trump “caved” by not sustaining higher tariffs, per X sentiment. Globally, the framework signals U.S. dominance but risks alienating allies like Japan, which warned of economic harm from Trump’s tariffs. China’s export licenses and student access concessions show flexibility, but unresolved issues—subsidies, tech transfers—persist.

Where do we go from here?

The US-China trade framework announced on June 11, 2025, locks in a 55% U.S. tariff versus China’s 10%, securing rare earths, and opening U.S. colleges to Chinese students. Trump’s tough stance forced China to concede, protecting American interests in a $300 billion trade deficit battle. Yet, the deal’s temporary status, high tariffs, and $1,200 household cost raise concerns about economic stability. As negotiations continue, the framework’s success will hinge on congressional ratification and Xi’s approval, shaping the 2026 midterms and U.S.-China relations in a fragile truce.