President Trump said following his meeting with Chinese leader Xi Jinping in South Korea that he had agreed to cut tariffs on China in exchange for commitments from Xi to buy U.S. soybeans and energy, allow exports of rare earth minerals, and crack down on fentanyl.
Why it matters: A trade truce between the world's two largest economies will potentially come as a huge relief to businesses, investors and consumers.
- Speaking to reporters on Air Force One en route back to D.C., Trump said tariffs on Chinese exports would be lowered to 47% from 57%.
- He later said in a Truth Social post they'd agreed on "many things," with others "being very close to resolved."
Driving the news: The meeting lasted around 1 hour and 40 minutes and began in a friendly fashion, with Trump describing Xi as a "friend" and "great leader" whom it was an "honor" to meet.
- Xi responded that he had a "warm" feeling meeting with Trump again, and said that while the U.S. and China "do not always see eye to eye," the countries should be "partners and friends."
- The cameras withdrew without the leaders taking questions, and Trump didn't make any remarks before boarding Air Force One to return to Washington.
- But the suspense didn't last long, as Trump began speaking to reporters once on board. He said he'd travel to Beijing in April, and Xi would visit the U.S. after that.
Hours later, in the Truth Social post, Trump hinted at a possible "very large scale transaction" for China to buy oil and gas from Alaska.
- He also said China would buy "massive amounts" of soybeans, sorghum and other agricultural products.
- "In fact, as I said once before during my first Administration, Farmers should immediately go out and buy more land and larger tractors," Trump wrote.
The other side: Chinese state media quoted Xi as offering a similarly positive spin on the meeting.
- "The world today is confronted with many tough problems. China and the United States can jointly shoulder our responsibility as major countries, and work together to accomplish more great and concrete things for the good of our two countries and the whole world," Xi said, per Xinhua.
By the numbers: Markets took the news cautiously in the early hours. U.S. stock futures were flat early Thursday, following a slightly lower close in Asia and similar open in Europe.
- Oil, gold and cryptocurrencies fell slightly, while the dollar was flat and yields on U.S. Treasuries were up a bit.
Catch up quick: Trump announced multiple new agreements with key trade partners in Asia this week, ahead of the high-stakes meeting with Xi.
- "The world is watching, and I think we'll have something that's very exciting for everybody," Trump said at the Asia-Pacific Economic Cooperation (APEC) summit.
- Trump said in a Truth Social post just an hour before sitting down with Xi that the U.S. would resume testing nuclear weapons after a three-decade hiatus, in part because of China's nuclear advancements.
- It's unclear whether that surprise announcement came up in the closed-door discussions.
What to watch: The big question is whether lasting agreements are now actually in place on the hardest issues in the relationship: access to rare earth minerals, soybean exports, the flow of fentanyl, and export restrictions on U.S. tech like AI chips.
- For now at least, Trump won't be imposing the extra tariff of 100% he'd threatened on Chinese goods.
The intrigue: Trump secured a number of rare earth deals during this Indo-Pacific — a nod to the reality that the U.S. needs a diversified supply chain.
- The U.S. is unlikely to be able to stand on its own with rare earths in the near-term, the vast majority of which are controlled — and used as leverage on the global stage — by China.
- Trump will meet with Central Asian leaders when he returns to Washington, with rare earths top of the agenda.
Editor's note: This story has been updated with market reactions.
