President Donald Trump announced on June 11 that the United States and China had reached an agreement following two days of negotiations in London. The US delegation, led by Treasury Secretary Scott Bessent, traveled overseas after last month's 90-day trade ceasefire ostensibly collapsed as both sides accused each other of violating the deal. While the White House popped open a bottle of French champagne, markets shrugged off the development.
China Did Not Bring Down London Bridges
In a Truth Social post, Trump confirmed that China would restart its shipments of rare earths and magnets. In exchange, Chinese students would be allowed to attend US colleges and universities. Additionally, the tariff rates were also reset: Beijing will be slapped with 55% levies, and the United States will be hit with 10%.
"RELATIONSHIP IS EXCELLENT! THANK YOU FOR YOUR ATTENTION TO THIS MATTER!" Trump wrote on the social media platform, noting that he and Chinese leader Xi Jinping will make the final approval.
Appearing before the House Ways and Means Committee, a jet-lagged Treasury Secretary Scott Bessent touted the agreement. He told lawmakers that the London talks helped stabilize and balance US-China trade relations. If Chinese officials follow through on the provisions of last month's Geneva deal, then the world's largest economies will help rebalance the global economy and challenge "the decades-old status quo."
Negotiations were ostensibly concentrated on rare earths. China had suspended nearly all shipments of seven categories of critical minerals and magnets in April, causing disruptions in global supply chains, as they are essential for smartphones, electric vehicles, and many other products. This was a crucial step taken by Xi, as Beijing controls approximately two-thirds of global production and processes around 90% of worldwide supplies.
How monumental was this recent development? The answer could be found in the US stock market. Immediately after Trump's announcement, US stocks were little changed and remained so throughout the June 11 trading session. Traders appeared to focus more on the May Consumer Price Index (CPI) report. Put simply, investors were indifferent, likely because they are still waiting for the flurry of trade pacts that were supposed to be unveiled by now.
Please Bear With Us
Speaking in an interview with CNBC, Commerce Secretary Howard Lutnick stated that “so many” trade agreements were in the works and would be revealed soon, echoing his colleagues’ remarks over the past month. “We're going to get them done. We're in good shape with lots of countries, but good shape isn't good enough for the United States of America,” Lutnick told the business news network’s Money Movers.
The world is watching the calendar because July 9 is fast approaching. This is roughly the deadline for Trump’s reciprocal tariffs. A week after the April 2 “Liberation Day” announcement, he authorized a 90-day freeze, enabling US trading partners to negotiate deals with the administration. Peter Navarro, the top White House trade adviser, suggested that the United States could complete 90 deals in 90 days.
To date, the United States has announced only a preliminary trade framework with the United Kingdom. So far, according to administration officials and media reports, the White House is engaged in active trade talks with South Korea, Vietnam, Japan, India, and the European Union. National Economic Council Director Kevin Hassett also assured the public that multiple trade agreements are on the cusp of being finalized and require Trump’s approval.
The US Trade Representative’s Office recently sent out letters to other countries, requesting they submit their final offers before next month’s deadline. If not, Trump will follow through on the Make America Wealthy Again tariff rates.
China Needs Something
In the end, despite China’s posturing and the June 11 pact not amounting to much, the world’s second-largest economy needs an agreement. At this point, China needs America more than America needs Xi Jinping. One glance at the data in the Asian powerhouse suggests big trouble is brewing in little China. In June alone, manufacturing slipped into contraction again, exports came in below expectations, imports plummeted, and consumer and producer prices fell into deflation, signaling a sharp economic slowdown. Still, the US tariff posture has yet to bear fruit in global trade.
