U.S. and China Strike Provisional Trade Framework to Ease Tensions

The United States and China have reached a provisional trade framework aimed at de-escalating ongoing tensions and reinstating the Geneva agreement. The accord, announced on June 10, 2025, follows two days of negotiations in London and includes mutual tariff reductions, commitments on rare earth mineral supplies, and adjustments to student visa policies.

Under the framework, both nations have agreed to reduce tariffs by 115 percentage points. President Donald Trump stated that U.S. tariffs on Chinese goods would total 55%, including pre-existing tariffs, while China would maintain a 10% rate. This marks a significant decrease from previous levels, where tariffs had escalated to as high as 145%.

A key component of the agreement involves China expediting the supply of rare earth minerals, which are essential for various U.S. industries, including technology and defense sectors. This move aims to alleviate previous restrictions that had disrupted global supply chains. Additionally, the United States will halt efforts to revoke visas of Chinese students enrolled in American universities, addressing concerns over educational exchanges and aiming to foster better bilateral relations.

The negotiations in London involved high-level officials from both countries. U.S. Commerce Secretary Howard Lutnick announced that the newly agreed trade framework is expected to resolve ongoing restrictions concerning rare earth elements and magnets. Lutnick indicated that the U.S. negotiating team would present the framework to President Donald Trump for approval, with the goal of moving forward to implement the agreement and address critical supply issues.

China's Vice Premier He Lifeng emphasized the importance of building consensus and maintaining communication between China and the United States following the negotiations. He reiterated China's clear and consistent stance on trade and its willingness to engage under firm principles.

Prior to this agreement, the U.S. and China had been engaged in escalating trade tensions, characterized by tit-for-tat tariffs that reached as high as 145%. In April 2025, the U.S. imposed a 34% "reciprocal tariff" on most Chinese imports, to which China responded with a matching tariff and additional export controls on rare earth minerals. These measures had significant implications for global supply chains and economic stability.

Following the announcement of the provisional trade framework, U.S. stock markets experienced minimal movement, with the S&P 500 rising by 0.1% to 6,005.88. Chinese markets saw a more positive response, with Hong Kong and Shanghai indices gaining 1.6% and 0.4%, respectively.

The agreement's focus on rare earth minerals is particularly significant, as China's previous export restrictions had disrupted global supply chains. By expediting the supply of these critical materials, the agreement aims to stabilize industries reliant on them.

The decision to halt efforts to revoke visas of Chinese students addresses concerns over educational exchanges and aims to foster better bilateral relations. This move is expected to have positive implications for academic institutions and cultural understanding between the two nations.

While the provisional trade framework marks a significant step toward easing tensions, it remains subject to approval by both nations' presidents. The coming weeks will be crucial in determining the framework's implementation and its potential to serve as a foundation for more comprehensive trade relations between the United States and China.