US-China Trade Deal Born of Desperation: GTRI

US President Donald Trump and Chinese President Xi Jinping on October 30, 2025, agreed to a limited trade pact in Busan. Washington will cut tariffs on Chinese goods by 10%, reducing the so-called “fentanyl-related” import duty from 20% to 10%.

In exchange, Beijing committed to buy more of US agricultural products, particularly soybeans, America’s largest farm export valued at $24.5 billion in 2024, and to continue exports of rare-earth minerals for at least a year.

The agreement reflects Washington’s mounting concern over vulnerabilities in semiconductor and electronics production, said GTRI. Rare-earth minerals are essential to chipmaking and clean-energy technologies, areas where Chinese dominance leaves the US exposed.

Beijing, however, understands that America’s dependence extends far beyond rare-earths—to green-energy inputs, pharmaceutical ingredients, and mass-market consumer goods—giving China multiple levers of influence even after tariff cuts, said Ajay Srivastava, founder of GTRI.

China’s exports to the US rose from $28.8 billion in May 2025 to $34.3 billion in September 2025, underscoring no impact of US tariffs. Weak domestic manufacturing and persistent Chinese cost advantages have kept American buyers reliant on Chinese supply.