In momentous news for the global trade war and the global semiconductor industry, President Trump and China's Xi Jinping have reportedly agreed on a one-year tariff truce that could pave the way for a lasting easing of tensions between the two nations. As reported by the New York Times, the pair met at an airport in the South Korean city of Busan, which finally brought some clarity and de-escalation to the ongoing trade war between the two superpowers.
According to the report, the two have reached " a series of agreements that broke little new ground but unwound thorny issues that had been plaguing negotiations for a lasting trade deal."
Broader measures include a continued limit to tariffs driven by the "tit-for-tat" escalations, and Trump's agreement to halve a 20 percent import duty placed on China. Crucially for the computing industry, Trump claims that China has agreed "to suspend for a year" new measures designed to crack down on the supply of rare earth metals vital to the manufacturing of hard drives and semiconductors. "All of the rare earth has been settled," Trump announced triumphantly.
One of the biggest flashpoints between the two nations has been artificial intelligence and the proliferation of chips required to power the vast computing needs of inference and training AI models. Specifically, Washington has hamstrung AMD and Nvidia in selling its most powerful chips to China, forcing the companies to create nerfed versions which comply with stringent export laws. Trump confirmed two leaders discussed chips, and according to NYT, "did not rule out the possibility" of letting Nvidia sell AI chips to China. However, Trump was adamant that there was no discussion of Nvidia's potent Blackwell chips, adding, "We're not talking about Blackwell," Bloomberg reports. That's despite claims just from Trump earlier this week that the two would "be speaking about Blackwells" ahead of the meeting.
According to reports, China's own debrief of the summit was decidedly more measured, and crucially did not mention any semiconductor agreements. While the reported settling of the rare earths matter and the breaking of some ground over Nvidia will buoy investors, plenty of issues remain unresolved, and reports that today's agreement marks a truce, rather than a treaty.
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