China and the US have reached an agreement to ease trade restrictions, with Beijing suspending its latest rare earth export controls in exchange for lowered tariffs and restrictions from Washington. The Chinese Commerce Ministry announced the deal on its website, stating that the suspension will be in effect for one year, during which time specific plans will be refined.

The agreement follows a meeting between Chinese President Xi Jinping and US President Donald Trump in South Korea, as well as economic and trade delegation talks in Kuala Lumpur. China’s earlier restrictions on rare earth mineral exports, which have dual military use, were seen as a response to US curbs on advanced semiconductors and chipmaking equipment introduced in late 2022.

Rare earth minerals are critical for most modern technology, from cellphones to missiles, and China dominates their extraction and processing. Under the deal, the US has agreed to suspend its recent rule expanding export restrictions to businesses at least 50% owned by entities on its “entity list.” The US will also suspend its investigation measures targeting Beijing’s maritime, logistics, and shipbuilding industries, and lower fentanyl-related and reciprocal tariffs.

In response, Beijing will adjust its retaliatory measures. The deal also includes the resumption of Chinese purchases of US soybeans and other agricultural products, which were paused during the countries’ recent trade stand-off. However, older trade restrictions will remain in place.

The agreement marks a significant development in US-China trade relations, with both countries seeking to ease tensions and promote cooperation. The suspension of rare earth export controls and the lowering of tariffs and restrictions are expected to have a positive impact on trade between the two nations. The US and China will likely continue to negotiate and refine their trade policies in the coming months, with the goal of promoting mutual benefit and cooperation.