BUSAN, SOUTH KOREA – The United States and China announced a significant trade agreement on Thursday, October 30, 2025, in a move aimed at de-escalating a prolonged and economically damaging trade war. Following a meeting in Busan, South Korea, U.S. President Donald Trump stated that an accord had been reached to lower certain U.S. tariffs in exchange for China lifting export restrictions on critical rare earth minerals.

The meeting, which lasted approximately one hour and 40 minutes, took place on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit being held in nearby Gyeongju. President Trump described the talks with his counterpart, Xi Jinping, as an "amazing meeting" and a "great success." He announced that the U.S. would reduce tariffs linked to fentanyl from 20% to 10%, which would lower the total average tariff rate on Chinese goods from 57% to 47%. In return, President Trump said China had agreed to resume purchases of American soybeans and ensure the supply of rare earths for one year, with the deal being subject to annual renewal.

President Xi’s public comments were more measured. According to Chinese state media, he noted that the two countries' economic teams had previously "reached a basic consensus on addressing our respective major concerns" during preparatory talks in Kuala Lumpur, Malaysia. China's Ministry of Commerce later confirmed the agreement, stating it would make "corresponding adjustments" to its countermeasures and suspend its own export control measures.

Implications for Global and Kenyan Economies

The truce between the world's two largest economies has immediate global significance, potentially calming volatile international markets that have been unsettled by the trade dispute. For Kenya, the implications are multifaceted, touching on trade, commodity prices, and the nation's strategic mineral ambitions.

China is Kenya's largest trading partner, and the U.S. is another key economic and strategic ally. The trade war has created an unpredictable global economic environment, impacting Kenyan businesses through fluctuating supply chain costs and demand for exports. A sustained de-escalation could foster greater stability, benefiting Kenyan importers and exporters who rely on predictable global trade flows.

Of particular importance is the agreement on rare earth elements (REEs). These 17 minerals are essential for manufacturing high-tech products, including smartphones, electric vehicles, and advanced defense systems. China currently dominates the global market, accounting for nearly 70% of rare earth mining and 90% of processing. Beijing's previous threats to restrict exports caused significant alarm among global manufacturers.

This global supply dynamic places Kenya in a potentially strategic position. The country possesses significant untapped rare earth deposits, particularly at Mrima Hill in Kwale County, which is considered one of the world's top five largest deposits. While the Mrima Hill project has been stalled due to licensing and regulatory issues, a diversification of the global supply chain away from China could renew interest and investment in Kenyan mineral resources. The government's stated goal is to increase the mining sector's contribution to GDP from under 1% to 10% by 2030, a target that hinges on developing resources like rare earths.

Details of the Agreement

The core of the deal involves the U.S. halving the 20% tariff rate it had imposed on a range of Chinese goods. This tariff was specifically linked to pressuring Beijing over the flow of precursor chemicals used to produce fentanyl, a synthetic opioid that has fueled a public health crisis in the United States. President Trump confirmed the tariff reduction was a direct response to President Xi’s commitment to “work very hard” to stop the flow of these substances.

The agreement was foreshadowed by talks between U.S. and Chinese officials in Kuala Lumpur, where a framework was established. According to China's Ministry of Commerce, this framework included the U.S. suspending a rule that would have expanded its "entity-list" export restrictions. In return, China agreed to suspend its planned export control measures. President Trump also announced he would visit China in April 2026.

While the deal marks a significant step toward resolving the trade conflict, its one-year term on the crucial rare earths component suggests a tentative, rather than permanent, resolution. The coming months will test the durability of the consensus reached in Busan and determine whether it signals a lasting improvement in U.S.-China relations or merely a temporary pause in their economic rivalry.