The US-China trade deal is officially “signed and sealed,” according to Commerce Secretary Howard Lutnick, who spoke to Bloomberg yesterday. This marks a significant step forward after President Trump initially announced the deal. The key elements discussed involve China delivering rare earth metals to the US in exchange for the removal of certain countermeasures from the American side.
However, uncertainty remains around whether semiconductors will be part of the deal, given the ongoing tension between the two countries over chip exports.
Lutnick explained that after a trip to Geneva and some delays, the deal was finalized in London just days ago. He noted that although the deal is signed, there are other deals in the works, including one with India, but these must pass through the respective governments’ approval processes. President Trump is reportedly taking a hands-on approach to finalizing these agreements.
According to Lutnick, “China will deliver rare earths to us,” and in return, the US will relax certain restrictions. However, it’s unclear if this includes the removal of semiconductor trade restrictions, which have been a major point of contention in past negotiations. Lutnick’s comments were echoed by Reuters, which reported that the US and China had agreed on expediting rare earth shipments, though the US’s reciprocal actions remain undisclosed.
Rare earth minerals have been a central focus in these trade talks, as China controls the majority of global supply. The suspension of shipments to the US had posed a significant risk to industries like automotive, defense, and electronics. Despite these agreements, shares of American rare earth companies, such as MP Materials, dipped by 2.6% in pre-market trading after experiencing a 73% surge in June.
Much like China’s hold on rare earths, the US maintains dominance over advanced AI chips, particularly through companies like NVIDIA and, to a lesser extent, AMD. These companies are leaders in AI chip design, which allows the US to control their sales, particularly to nations considered a threat to national security. The fate of AI chips in the trade deal remains uncertain, with NVIDIA’s stock staying flat while AMD saw a slight gain of 1%. AMD’s strong performance in June, with a 30% increase, is attributed to multiple factors, including potential expansion in China.