Trump goes back to the future with China deal
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President Trump and Chinese President Xi Jinping shake hands following a bilateral meeting today in Busan, South Korea. Photo: Andrew Harnik/Getty Images
President Trump and Chinese leader Xi Jinping announced the outlines of a historic trade deal, touching on everything from agriculture to technology exports ... again.
The big picture: The deal announced early this morning overlaps considerably with previous deals Trump and Xi have cut over the past six years. In many cases, in some way or another, those deals fell apart or failed to perform, often with the Chinese changing their plans abruptly.
Breaking it down: Agriculture, rare earths, export controls — whether in Trump's first term or even earlier this year, these pacts have history.
- Within months of past pronouncements — the "Phase One" deal in 2019 or the rare earths truce in May 2025 — the situation was mostly back to square one.
Now, here we are again.
- And since this appears to be a temporary truce — and we only have general assurances from Trump on what was actually agreed, rather than some kind of mutually binding process — we're likely to be back here again pretty soon.
The intrigue: In many ways, we're already back to the future.
- A deal for China to ship rare earths and buy soybeans mostly takes the U.S. back to February 2025, before Trump started imposing tariffs.
- Now, though, there's still a 47% levy on Chinese exports, which puts major strains on businesses on both sides of the relationship, and imposes costs on U.S. consumers (particularly when you factor in the de minimis tariffs, which make small online purchases much more expensive.)
Markets reacted cautiously Thursday — as Axios Markets author Madison Mills notes, investors are happy to see farmers sell soybeans, but what they really want is tariffs to go away.
- Wall Street knows that at the end of the day, one way or another, farmers often get made whole. Not so for companies whose profit margins are being squeezed by tariffs.
- "The deal should offer a modest reprieve for businesses caught in the crossfire between the two strategic rivals, but stops well short of resolving deeper structural tensions" and leaves risks for the Chinese economy too, Corpay chief market strategist Karl Schamotta wrote Thursday.
What to watch: The linchpin to the whole deal is likely the one-year truce on exports of rare earth minerals, for which China controls the global market and without which cars, planes, batteries and bombs can't be built.
- The last time the two sides struck a truce, it was ignored almost immediately. Then they rekindled the deal, and that lasted about three months before falling into crisis again.
- A nominal year gives the U.S. time to make supply deals globally and bring more domestic production and processing capacity online — but whether any of that can even make a dent in the dependence on China is an open question.
- And if China limits exports again down the road, or either leader decides the deal isn't working as envisioned, recent history suggests trade wars can be reignited rather quickly.
