Trump and Xi’s Breakthrough: The Deal That Ended the Trade War

In what’s being hailed as the most significant thaw in the U.S. - China relations since the trade war began, President Donald Trump announced a sweeping trade deal with Chinese President Xi Jinping after a high-stakes meeting in Busan, South Korea. The agreement, finalized during a bilateral summit on the sidelines of the APEC conference, marks a dramatic de-escalation between the world’s two largest economies.

The “historic” accord aims to restore trade stability while addressing long-standing disputes over tariffs, rare earth exports, and the illicit fentanyl trade. Under the terms, China will suspend all retaliatory tariffs and non-tariff countermeasures imposed since March 4, and issue new general licenses for rare-earth exports, including gallium, germanium, antimony, and graphite. Beijing also pledged to pause new export controls for a year and end investigations into U.S. semiconductor companies, a key point of friction in recent years.

Equally notable is China’s commitment to curb the flow of fentanyl and its chemical precursors to the United States. In exchange, Washington will reduce tariffs on Chinese imports by 10 percentage points, bringing the average duty down to roughly 47% from 57%. The White House described the move as “a balance of strength and cooperation,” designed to safeguard U.S. economic interests while easing global supply chain pressures.

Agriculture also emerged as a major winner in the deal. China agreed to purchase at least 12 million metric tons of U.S. soybeans immediately, with annual commitments extending through 2028. The agreement further includes the resumption of U.S. sorghum, pork, corn, and hardwood log imports critical steps toward revitalizing America’s farm sector, which was hit hard by earlier trade tensions.

Both sides framed the outcome as a success. President Trump called his 90-minute meeting with Xi “amazing” and rated it a “12 out of 10,” declaring that “there’s no roadblock on rare earths anymore.” Xi echoed a tone of cautious optimism, saying China and the U.S. had reached a “consensus to address problems and deliver tangible results.”

Beyond tariff relief, the pact halts pending 100% duties that were due this month and defers U.S. export restrictions targeting China’s shipbuilding and logistics sectors. Analysts view the deal as a pragmatic truce that brings “temporary calm” to an otherwise volatile economic rivalry, providing breathing room for both nations and global markets alike.

While fundamental differences remain, the Busan accord represents the biggest de-escalation in the U.S. - China relations since the trade war began a rare moment of alignment between two economic giants whose cooperation continues to shape the world’s financial future.