The United States finalized a trade deal with China on Thursday that will see tariffs on Chinese imports fall to 55 percent (from 145 percent) and Chinese duties on American imports drop to 10 percent (from 125 percent). Though a reduction in tariffs is worth celebrating, the retention of American export controls on Chinese-bound semiconductors and China's maintenance of licensing for American-bound rare earth elements suggest that the struggle between the two nations is far from over.
The early-May Geneva Consensus reached by American and Chinese trade representatives in Switzerland broke down after China refused to roll back export restrictions on rare earth elements (REEs)—critical inputs for the production of semiconductors. About 90 percent of those critical inputs are produced in China. The Trump administration responded by announcing export controls on semiconductor design software and jet engines.
Following negotiations in London between Commerce Department Secretary Howard Lutnick and Chinese Commerce Minister Wang Wentao, President Donald Trump announced the reduction of American tariffs on Chinese goods and gave permission for Chinese students to continue studying at American universities. China reciprocated by decreasing its tariff on American exports and by removing export controls on REEs in what Lutnick called "a balanced way."
