According to CNBC, U.S. President Donald Trump announced a 1-year agreement with China on rare earths and critical minerals while cutting fentanyl tariffs on Beijing from 57% to 47% following his meeting with Chinese President Xi Jinping in Busan, South Korea on October 30, 2025. The meeting lasted one hour and 40 minutes and marked the first time the two leaders had met in six years. Trump described the discussions as “amazing” and revealed plans to visit China in April, followed by a reciprocal visit from Xi to the U.S. The agreements come amid escalating tensions between the economic superpowers, including recent Chinese export controls and U.S. threats to ban software-powered exports to China. This breakthrough suggests potential thawing in the relationship that has been strained throughout 2025.
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Table of Contents
The Rare Earths Chess Game
The 1-year rare earths agreement represents a critical strategic compromise between two nations that have weaponized supply chain dependencies. China controls approximately 60% of global rare earth mining and nearly 90% of refining capacity, giving Beijing substantial leverage in China’s economic statecraft. These 17 elements are essential for everything from electric vehicles and wind turbines to advanced military systems. The temporary nature of this agreement—requiring annual renegotiation—creates ongoing uncertainty for manufacturers who depend on stable supply chains. This arrangement essentially institutionalizes leverage for both sides, with China maintaining its dominant market position while the U.S. secures temporary access to materials crucial for its green energy and defense priorities.
Fentanyl Tariff Reduction: Political Calculus
The fentanyl tariff reduction from 57% to 47% represents a significant policy shift with complex domestic implications. While the 10 percentage point cut provides some relief, these tariffs remain exceptionally high by historical standards. The timing suggests the Trump administration may be responding to pressure from U.S. pharmaceutical companies and medical providers who have faced supply chain disruptions and cost increases. However, this partial concession also allows the administration to maintain its tough-on-China rhetoric while addressing practical economic concerns. The persistence of substantial tariffs indicates that the underlying trade tensions remain largely unresolved, with both sides making tactical concessions rather than fundamental policy changes.
The Personal Diplomacy Factor
The emphasis on personal relationships between Donald Trump and Xi Jinping highlights the continued importance of leader-to-leader diplomacy in U.S.-China relations. Trump’s description of Xi as “an old friend” and the planned reciprocal visits in 2026 suggest both leaders recognize the value of personal rapport in managing this complex relationship. However, this approach carries significant risks—personal chemistry can create temporary breakthroughs but often fails to address structural disagreements. The fact that this meeting occurred in Busan, South Korea, rather than in either capital, also reflects the delicate diplomatic balancing act both leaders must maintain given domestic political pressures.
Broader Economic Context
These developments occur against a backdrop of significant economic strain between the world’s two largest economies. The recent Chinese purchase of U.S. soybeans—the first in several months—suggests Beijing may be testing the waters for broader economic cooperation. However, fundamental disagreements over technology transfer, intellectual property protection, and market access remain largely unaddressed. The limited scope of these agreements indicates both sides are pursuing confidence-building measures rather than comprehensive resolution of their economic disputes. For global markets, this creates a “two steps forward, one step back” dynamic where progress is real but fragile and subject to reversal based on political developments in both capitals.
Implementation Challenges Ahead
The success of these agreements will depend heavily on implementation details that remain unspecified. The rare earths arrangement lacks public information about quantities, pricing mechanisms, or verification procedures. Similarly, the fentanyl tariff reduction leaves unanswered questions about precursor chemicals and enforcement mechanisms. Historical precedent suggests that U.S.-China agreements often face implementation challenges due to bureaucratic resistance, competing priorities, and interpretation differences. The annual renegotiation requirement for the rare earths deal creates ongoing uncertainty for businesses trying to make long-term investment decisions. Both sides will need to establish clear working-level mechanisms to translate these high-level agreements into practical outcomes.
Strategic Outlook and Implications
This meeting represents a tactical de-escalation rather than a strategic reset in U.S.-China relations. The agreements address specific pressure points without resolving underlying tensions over technology competition, regional security, and economic ideology. The planned reciprocal visits in 2026 suggest both sides see value in maintaining dialogue channels, but the fundamental competition between the systems represented by the current Chinese leadership and U.S. administration continues unabated. For businesses operating in both markets, this creates a persistent environment of geopolitical risk where supply chains and market access remain subject to sudden policy changes driven by broader strategic considerations rather than pure commercial logic.
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