US and China Reach Framework for Rare Earth Trade Agreement

US President Donald Trump announced yesterday that a trade agreement had been reached with China, though he provided no details at the time. It was only an hour later that Commerce Secretary Howard Lutnick clarified the deal concerned rare earth shipments.

According to Lutnick, the agreement formalizes the terms settled during negotiations held in Geneva this past May. A second round of talks took place earlier this month in London, following accusations from both sides that the other had violated the previous understanding, which included reducing the steep tariffs imposed during Trump’s trade war.

“They will deliver rare earths to us, and once that’s done, we’ll revoke our countermeasures,” Lutnick said, referring to export restrictions on materials such as ethane—used in China’s plastics production—and software for chips and aircraft engines.

Lutnick made the statement to clarify President Trump’s earlier comments. “We signed with China yesterday,” Trump had said, adding that the US was also advancing a deal with India without providing specifics or clarifying the scope of the agreement.

Lutnick told Bloomberg that Trump is also prepared to finalize a series of trade agreements over the next two weeks in connection with the July 9 deadline the president set for reinstating higher tariffs that were suspended in April.

“We’re going to close the top ten deals, categorize them properly, and then other countries will follow,” he said.

Lutnick did not specify which nations would be part of this first wave of trade deals. However, earlier on Thursday, Trump suggested the US was close to reaching an agreement with India.
The president also stated that if the agreements were not concluded in time, he would send “letters” to the respective countries outlining the trade terms. These countries will be placed in their “appropriate categories” on July 9, Lutnick added.

Source: Valor Econômico

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