U.S.-China Trade Deal Includes 55% Tariff, Trump Says
JED GRAHAM08:35 AM ET 06/11/2025
U.S.-China trade talks in London have cleared the way for a full resumption of rare-earth exports to the U.S., President Trump said in a Truth Social post early Wednesday. He also indicated that U.S. tariffs on a broad range of Chinese imports would rise from 30% to 55%. The big question is what Beijing has gotten in return. In particular, has Beijing's tight grip on rare earth magnets forced a major relaxation of U.S. export controls on chipmaking equipment and advanced semiconductors produced by Nvidia (NVDA) and others?
S&P 500 futures rose slightly on tame inflation data after a three-session winning streak has carried the index back near its record high. Wall Street is enjoying a sense of calm that, whatever China's asking price, Trump will agree to it to avoid the massive economic fallout in the U.S. that would come if Beijing continues to freeze rare-earth exports.
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Meanwhile, Nucor (NUE) and Steel Dynamics (STLD) are among the worst S&P 500 performers as steel prices tumble on news that the Trump administration is nearing an agreement that would allow U.S. steel imports from Mexico up to a specified quota to face a much lower tariff rate than the current 50%.
U.S.-China Rare Earths Deal: What We Know
Trump said the deal will reverse the State Department's recent move to block educational visas for Chinese students to attend U.S. universities.
As Lutnick described the framework, both sides would take down the non-tariff trade barriers erected recently. That's consistent with The Wall Street Journal reporting on Monday that Trump authorized Treasury Secretary Scott Bessent and fellow U.S. negotiators to walk back recent U.S. moves to suspend exports of jet engines, chip-design software and ethane.
Beijing has also criticized the Trump administration's announcement on May 12 — the same day as the U.S.-China trade truce — that it would ensure America's "global AI dominance" in part by imposing criminal sanctions on companies "using Huawei Ascend chips anywhere in the world."
Possible U.S.-China Deal Surprises
"U.S. restrictions on lower-end AI chips and other semiconductors could be relaxed, though we anticipate cutting-edge chips and advanced manufacturing gear will remain under more stringent control," wrote Ulrike Hoffmann-Burchardi, UBS Global Wealth Management's chief investment officer for global equities.
Yet some on Wall Street think Beijing was in position to demand a much broader reversal of chip export controls because a shortage of rare earths threatens to hit the brakes on U.S. manufacturing of autos, high-tech and defense gear.
It's "unrealistic," wrote Christopher Wood, global head of equity strategy at Jefferies, "for Washington to assume that China is going to ease up controls on rare earths if the U.S. does not do the same as regards exports of U.S. tech products."
China views U.S. export controls on chips and chip equipment "as the equivalent of a declaration of economic war against China, since it amounts to a deliberate effort to prevent the upgrading of the mainland economy."
Along with easing rare-earth curbs, Beijing also could give Trump some other victories to dilute the focus on the U.S. potentially giving up technology viewed as critical to national security and America's artificial intelligence leadership.
Beijing could make a full-fledged effort to halt the flow of fentanyl and related precursors. Trump has also eyed a shift in control of TikTok's U.S. based operations.
U.S.-China Ceasefire Was Set To End Aug. 12
The focus of U.S.-China trade talks has clearly shifted from tariffs to export controls. Both sides agreed to slash tariffs by at least 100% of the value of imports in the truce announced on May 12. Broad-based U.S. tariffs imposed on Chinese imports in President Trump's second term now stand at 30%, down from a peak of 145%. So the tentative new deal would rise to 55%.
Beijing, which retaliated with a tariff as high as 125%, agreed to cut it to 10%.
In accusing Beijing of seriously violating the May 12 deal, Trump notably omitted new threats to retaliate, including by raising tariffs.
When the U.S.-China ceasefire ends, the default plan is to impose an additional 24% reciprocal tariff on China, as announced on April 2.
Reciprocal Tariffs Get Legal Reprieve
Trump's trade negotiators were briefly thrown a curveball last month, when the U.S. Court of International Trade ruled that he had exceeded his authority to impose reciprocal tariffs under the International Emergency Economic Powers Act. But a federal appeals court quickly put that ruling on hold as it weighed initial filings in the case.
Now that short-term hold has been extended, with oral arguments in the case scheduled to begin July 31.
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