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US-China Trade Deal Eases Chip Export Ban, Rare Earth Restrictions
The United States and China have reached a trade agreement to ease export restrictions on automotive computer chips, rare earth minerals, and fentanyl precursors, the White House announced Sunday. The deal follows high-level talks between Chinese President Xi Jinping and former U.S. President Donald Trump in South Korea earlier this week.
Key Provisions of the Agreement
Under the terms of the deal, China will lift restrictions on the export of automotive computer chips produced by Nexperia, a Chinese-owned but Netherlands-based semiconductor manufacturer. The White House fact sheet states that Beijing will "take appropriate measures to ensure the resumption of trade from Nexperia's facilities in China," allowing the production of critical legacy chips to resume for global markets.
Nexperia, which manufactures about 70% of its chips in Europe before sending them to China for final processing and re-export, had faced a ban that threatened global automotive supply chains. Major automakers, including Volvo Cars, Volkswagen, and Jaguar Land Rover, had previously warned of potential production halts due to chip shortages.
Rare Earth Minerals and Fentanyl Controls
China has also agreed to pause export controls on rare earth minerals-essential for manufacturing cars, aircraft, and weapons-for one year. Additionally, Beijing committed to implementing "significant measures" to curb the export of chemicals used in the production of fentanyl, a potent synthetic opioid linked to a surge in overdose deaths in the U.S.
Soybean Trade Revival
In a move to revive agricultural trade, China has pledged to purchase 12 million tonnes of U.S. soybeans by the end of 2025, followed by 25 million metric tonnes annually over the next three years. This commitment restores trade levels to those seen before China halted soybean imports earlier this year, a decision that had severely impacted American farmers.
In response to the earlier trade disruption, the Trump administration reinstated a financial aid program for U.S. farmers, originally introduced during his first term.
Broader Trade War Context
The agreement marks a temporary de-escalation in the ongoing trade conflict between the world's two largest economies. Since taking office in 2025, Trump had imposed tariffs on Chinese goods, prompting retaliatory measures from Beijing and creating widespread uncertainty in global markets.
While Trump described the talks as "amazing," U.S. Treasury Secretary Scott Bessent struck a more cautious tone in a Sunday interview with CNN. "We don't want to decouple from China," Bessent said, "but they've shown themselves to be an unreliable partner."
"We don't want to decouple from China... (But) they've shown themselves to be an unreliable partner."
Scott Bessent, U.S. Treasury Secretary
Next Steps and Industry Reactions
The deal follows Beijing's earlier indication on Saturday that it was considering exemptions for certain firms from the chip export ban. However, specifics on implementation timelines and enforcement mechanisms remain unclear.
Industry analysts have welcomed the agreement, particularly the resumption of chip exports, which had threatened to disrupt global automotive production. The rare earth mineral pause also provides temporary relief to manufacturers reliant on these critical materials.
