Kristina Roberts
The United States and China have taken an important step toward reducing the tension in their trade relationship. On Tuesday, both countries said they had agreed on a new framework that could help bring their trade agreement back on track and remove limits on exports, especially those related to rare earth minerals. While this new plan does not completely solve all the problems between the two countries, it is still a big step forward after months of uncertainty and rising tariffs.
This agreement came after two days of serious discussions between U.S. and Chinese officials in London. U.S. Commerce Secretary Howard Lutnick spoke to reporters after the meeting and said that the new deal adds more strength to the earlier agreement made in Geneva. That earlier deal had aimed to stop both sides from increasing taxes, or tariffs, on goods coming in from each other’s countries. But there was a problem — China still had strict limits on sending out important minerals that the U.S. needs. Because of that, the U.S. government decided to block China from buying certain high-tech products, like software used for designing semiconductors and even airplane parts.
Now, this new agreement from London seems to offer a balanced solution. It will reduce China‘s restrictions on sending out rare earth minerals and magnets. At the same time, the U.S. will also lower some of its own export restrictions. However, Lutnick did not share many details about exactly how this will work. The discussions had ended quite late at night, around midnight in London. Still, Lutnick sounded hopeful and explained, “We have reached a framework to implement the Geneva consensus and the call between the two presidents.”
He added that both sides would now take this plan back home and show it to their presidents — Donald Trump in the U.S. and Xi Jinping in China. If both leaders agree, the next step would be to put the plan into action.
On the Chinese side, Vice Commerce Minister Li Chenggang confirmed this. He also said that a trade framework had been agreed upon in principle. This means that while they have not signed the final papers yet, both countries have the same understanding of what the deal will look like. Now they are waiting for final approval from their top leaders.
Over the past few years, U.S. President Donald Trump’s trade policies have caused a lot of confusion in the global economy. The sudden increase in tariffs affected shipping routes, slowed down business at major ports, and made it difficult for many companies to plan ahead. Businesses in both countries, and even in other parts of the world, have lost billions of dollars either from decreased sales or increased costs.
Because of all this uncertainty, the World Bank recently lowered its prediction for global economic growth in 2025. They now believe the world economy will grow by only 2.3%, which is 0.4% less than what they had expected earlier. The main reason for this drop is the rising number of tariffs and the ongoing trade troubles between big economies like the U.S. and China. According to the World Bank, this kind of situation creates a “significant headwind” — in other words, a big obstacle — for most countries trying to grow their economies.
While the new agreement helps stop things from getting worse, it does not fix all the main issues between the U.S. and China. One big problem that remains is the way the U.S. feels about China’s economic system. American officials have often complained that China supports its companies too much and makes it hard for U.S. companies to compete fairly. These deep disagreements about how each country runs its economy have not been solved yet.
Josh Lipsky, a senior director at the Atlantic Council’s GeoEconomics Center, said that even though the two sides came to a basic agreement in Geneva, they still understood it in very different ways. That’s why they needed to meet again and talk more clearly about what actions each side was expected to take. He commented, “They are back to square one but that’s much better than square zero.” This means that although progress is still slow, at least talks have not completely broken down.
Both countries now have a deadline. They must come up with a more complete trade agreement by August 10. If they fail to do that, the taxes on imported goods will jump up again. For example, the U.S. could raise its tariffs from around 30% to a shocking 145%. China could do the same, increasing tariffs from about 10% to as high as 125%. This would be very bad news for businesses and customers in both countries because it would make many goods much more expensive.
So, even though the new plan agreed in London brings hope, there is still a lot of work to do. The U.S. and China must keep talking, keep compromising, and keep trying to understand each other better. Only then will they be able to create a stronger and more lasting agreement that helps both countries — and the rest of the world — feel more stable and confident in the future of global trade.
The coming weeks are very important. If both President Trump and President Xi agree to the new trade framework, it could reduce tensions and bring some relief to global markets. But if they do not, the world could soon face another round of high tariffs and economic trouble.
Will the two leaders find a way to agree? Can the new plan become something permanent? And will this be enough to stop future trade fights? These are the questions that many people — from business owners to world leaders — are now asking. Only time will tell how this story ends, but for now, this agreement gives a small sign of hope that better days might be ahead.
