In a surprising turn of events, President Donald Trump announced on June 11, 2025, that a trade deal with China is “done,” promising a steady supply of rare earth elements and magnets critical for industries like automotive and defense. This agreement, shared via Trump’s Truth Social platform, marks a step toward easing tensions between the world’s two largest economies, which have been locked in a heated trade war. But what does this deal mean, and why does it matter?
A Rocky Road to Agreement
The U.S. and China have been trading blows with tariffs and export restrictions for months, disrupting global supply chains and rattling financial markets. Earlier this year, Trump imposed tariffs as high as 145% on Chinese goods, while China retaliated with restrictions on rare earth exports—minerals essential for everything from electric vehicles to smartphones. These tit-for-tat moves pushed both nations to the brink, with oil prices spiking and ports facing chaos.
In May, a temporary truce was reached in Switzerland, lowering U.S. tariffs to 30% and China’s to 10%. Both sides agreed to a 90-day deadline to hammer out a lasting deal. However, accusations of broken promises led to renewed tensions until two days of intense talks in London this week. U.S. Commerce Secretary Howard Lutnick and China’s Vice Commerce Minister Li Chenggang confirmed a framework to implement the earlier “Geneva consensus,” setting the stage for Trump’s announcement.
What’s in the Deal?
According to Trump, China will supply the U.S. with magnets and “any necessary rare earths” upfront as part of the agreement. In return, the U.S. will make concessions, including allowing Chinese students to attend American colleges and universities. The deal still needs final approval from Trump and Chinese President Xi Jinping, but both sides are optimistic. Trump called it a “great WIN for both countries,” hinting at closer trade ties with China moving forward.
The agreement focuses heavily on rare earths, which are vital for high-tech manufacturing. China dominates this market, producing 60% of the world’s rare earths and processing nearly 90%. This gives them significant leverage, especially as the U.S. pushes for sustainable energy solutions that rely on these minerals. The deal aims to secure a reliable supply for American companies, reducing dependence on China’s goodwill.
Why Rare Earths Matter
Rare earth elements aren’t just rocks—they’re the backbone of modern technology. From the magnets in electric car motors to components in fighter jets, these materials are irreplaceable. China’s export restrictions in April, a response to Trump’s tariffs, sent shockwaves through industries that rely on these minerals. The U.S., lacking its own robust supply chain, faced a strategic challenge. This deal could stabilize access to these critical resources, ensuring American industries stay competitive.
The Bigger Picture
While the deal is a step forward, it’s not a cure-all. The agreement is limited in scope, and experts like Terry Haines from Pangaea Policy caution that it doesn’t signal a full resolution of U.S.-China trade disputes. The 55% tariffs Trump mentioned include older tariffs from his first term, and markets showed little reaction, suggesting skepticism about the deal’s impact. Meanwhile, U.S. Treasury Secretary Scott Bessent noted that broader trade talks, including with other countries, may extend beyond the 90-day deadline.
Oil prices, however, reacted immediately, with Brent crude rising $1 to $67.87 a barrel and U.S. West Texas Intermediate climbing 2.2% to $66.42. This suggests markets see the deal as a sign of reduced global trade tensions, at least for now.
What’s Next?
Trump has promised to set unilateral tariff rates with other trading partners soon, with letters outlining terms expected before July 9. The U.S. may extend pauses on aggressive tariffs for countries negotiating in good faith, but those dragging their feet could face higher levies. For now, the U.S. and China seem to be on a path to cooperation, but the road ahead remains uncertain.
This deal shows that diplomacy can yield results, even between rivals. For American students, businesses, and consumers, it could mean more stability in the products and technologies we rely on daily. But with final approval still pending, the world is watching to see if this “done” deal truly delivers.