Agreement in the trade dispute: USA and China are heading towards tariff reductions!

Agreement in the trade dispute: USA and China are heading towards tariff reductions!

On June 11, 2025, positive progress was reported in the trade and tariff conflict between the USA and China. China's Foreign Trade Representative Li Chenggang said an agreement in principle had been reached on a general framework. However, this agreement still needs to be approved by the leaders of both countries. US Trade Representative Jamieson Greer pushed for speedy implementation, while Commerce Secretary Howard Lutnick was confident that concerns about rare earths could be addressed by the new framework. Li Chenggang described the communication between the negotiating partners as professional, rational and open.

The talks took place in London, where the aim of the negotiations was to consolidate the reduction in mutual tariffs agreed a month ago in Geneva. A central point here is the export of rare earths from China. Last year, Germany imported around two thirds of its rare earths from China, which illustrates the importance of these raw materials. China produces about 70 percent of the rare earths mined worldwide and holds a monopoly in certain areas.

Background to the trade conflict

The trade conflict between the USA and China has been escalating for years. As part of this dispute, former US President Trump introduced tariffs totaling 145 percent against China in April. Beijing responded with high counter tariffs. In May, a preliminary agreement was reached in which tariffs were reduced to ten percent for US goods to China and to 30 percent for Chinese goods to the USA for an initial 90 days. Traders in China have already reported increasing orders from the US, but they also expressed concerns about possible loss of sales due to the ongoing tariff dispute.

Negotiations between the US and China were scheduled to last until mid-August, particularly to resolve disputes over US regulations on high-tech chips. In this regard, the US is trying to cut off China's access to the latest semiconductors. These strategic differences underscore the complexity of the conflict and are reminiscent of China's quick reactions, such as tightening export controls for rare earths.

outlook

The trade conflict not only affects both countries, but also influences the global economy. The Kiel Institute for the World Economy estimates that US products could become more expensive and the US economy could decline by 1.6 percent. The progress made and the hope of stabilizing the relationship could strengthen trust between the two nations, which is seen by both sides as the goal of the negotiations. As China continues to manage its strategic resources, the international community is excited about what lies ahead, particularly China's potential role as a mediator in global conflicts, including the situation in Ukraine.

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