Mayank Bansal, CFA
Mayank Bansal is a CFA Charterholder and heads the Equity Research team at Kapitales Research, with over 5 years of experience analysing global equity markets. He leads fundamental, data-driven research combining rigorous financial analysis with macro trends.
Will US-China Trade Tensions Escalate as Washington Presses Beijing Over Rare Earths Deal?
Highlights:
Washington Intensifies Pressure Over Trade Commitments
The United States has increased pressure on China to honour commitments under the Busan trade agreement, highlighting unresolved disagreements over critical mineral supplies and agricultural purchases. US officials Scott Bessent and Jamieson Greer held talks with Chinese Vice Premier He Lifeng, calling on Beijing to deliver tangible results under the existing trade agreement.
Washington expressed concerns about China's implementation of the agreement, particularly restrictions affecting rare earth exports. Despite these disagreements, both countries agreed to maintain negotiations aimed at stabilising bilateral economic relations.
Rare Earth Supplies and Agricultural Purchases Under Scrutiny
The Busan agreement, reached in October 2025, sought to ease escalating trade tensions between the world's two largest economies. Under the arrangement, US tariffs on Chinese goods were capped at approximately 20%, while Beijing committed to purchasing 25 million metric tons of American soybeans over three years.
China also agreed to expand agricultural imports and facilitate critical mineral supplies. However, American officials remain concerned about difficulties businesses face in securing sufficient rare earth materials, which are essential for electric vehicles, electronics and defence manufacturing.
Beijing Links Trade Progress to Tariff Concessions
China has expressed concerns about recent American trade restrictions while signalling willingness to increase agricultural purchases if Washington implements reciprocal tariff reductions. A proposed US$60 billion package of mutual tariff concessions remains unfinished, reflecting persistent differences over market access and trade obligations. Both governments nevertheless indicated their intention to resolve disagreements through continued consultations.
Outlook: Upcoming Leadership Meetings Could Shape Trade Relations
Attention now turns to anticipated meetings between President Donald Trump and President Xi Jinping during November's APEC gathering and December's G20 summit. The existing trade arrangement runs until 10 January 2027, leaving limited time to address outstanding commitments.
Meaningful progress could strengthen supply-chain confidence and support agricultural exporters. Conversely, continued disagreements over critical minerals and tariffs could revive uncertainty across global manufacturing, commodities and financial markets.
Note- All data presented is based on information available at the time of writing.
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