In a surprising turn, President Donald Trump announced on June 11, 2025, that the United States and China have reached a new trade agreement following high-stakes negotiations in London and a subsequent phone call with Chinese President Xi Jinping. Though modest in scope and still pending final ratification, the deal marks a significant shift from the bruising tariff war earlier this year.
At the heart of the agreement is a recalibrated tariff framework: U.S. tariffs on Chinese imports are now set at 55%, a blend of the 10% baseline “universal tariff” introduced in April and sector-specific duties layered on top. China, for its part, has responded with a relatively mild 10% tariff on U.S. goods substantially lower than the 84–125% retaliatory rates it imposed just months ago. While this doesn’t undo the aggressive escalation seen in April’s so-called “Liberation Day” tariffs, it signals a conscious step back from the brink.
One of the most impactful provisions in the deal involves rare earths and magnetic materials, which are essential to the global electronics, defence, and clean energy industries. China has agreed to resume exports of these materials on a short-term basis, offering a much-needed reprieve for U.S. companies dependent on Chinese supply chains.
This includes manufacturers of electric vehicles, industrial automation systems, and particularly machine vision hardware; where rare earth-based magnets and sensors are core components. However, these exports are limited to six-month contracts, leaving long-term stability uncertain.
The deal also includes a softer, symbolic gesture: the U.S. will allow more Chinese students to attend American universities, partially reversing prior restrictions. Though minor in economic terms, this move suggests a cautious effort to restore cultural and academic ties that have frayed in recent years.
Despite the public declarations of success, many analysts are urging caution. The agreement is being described as a “framework” rather than a fully executed treaty. Key details such as enforcement mechanisms, licensing timelines, and export control thresholds remain unclear. Both Trump and Xi have yet to formally sign off on the deal, and either side could reverse course in the event of domestic pressure or diplomatic setbacks.
For industries like machine vision, the implications are mixed. The resumption of rare earth exports may help stabilize costs for lenses, motors, and sensors in the short term. But with no real relief from the 55% tariffs on Chinese-made electronics and subassemblies, U.S. and European manufacturers are still under pressure to diversify their supply chains. Many are accelerating plans to move production to Southeast Asia, Eastern Europe, or North America. The broader strategic shift away from dependence on China continues, even as temporary cooperation returns.
This new deal is best seen not as a reset, but a recalibration. It pauses the trade escalation without resolving its root causes: technology competition, national security concerns, and deepening geopolitical rivalry. The tariff rollback is partial. The rare earth supply is conditional. And the goodwill gestures, while welcome, are modest.
The road to this point has been volatile. Just two months ago, Trump introduced sweeping tariffs including a 10% universal rate and a punishing 34%–145% range on Chinese goods. Beijing hit back hard, prompting fears of a supply chain crisis. The Geneva negotiations in May and London meetings in early June helped lower the temperature, leading to the current framework. But it is still, by every definition, provisional.
As the August review deadline approaches, both sides will face pressure, domestic and international, to clarify whether this is the beginning of a more stable trade relationship or merely another pause before the next round of escalation. For now, the rare earths will flow, the tariffs have softened slightly, and the world is watching.
