The Truth Behind the US-China Trade "Truce": Rare Earths Game Intensifies, China’s Chemical Market Sees Explosive Opportunities!

In June 2025, after prolonged negotiations, the US and China officially signed a trade truce agreement. This agreement has been regarded as a rare "breathing moment" in the economic confrontation between the two countries, but it still harbors significant uncertainties.

US President Donald Trump announced the agreement on social media, stating that "major progress" had been made on key issues such as rare earth exports and tariff reductions. At the same time, the Chinese Ministry of Commerce spokesperson confirmed the existence of the agreement but provided different interpretations on certain details, particularly emphasizing the principle of "lawful review" regarding rare earth exports.

This indicates that the US and China have not reached a comprehensive compromise and that the agreement is more of a strategic adjustment.

Since 2022, Sino-US trade relations have plunged to a low point due to tariff disputes and technological decoupling. The US has sought to suppress China's economic development through measures such as imposing higher tariffs and restricting technology exports. Meanwhile, China has adopted reciprocal countermeasures, including strengthening rare earth export controls and raising tariffs on American goods.

Although the June 2025 agreement signifies that both sides have temporarily set aside some of their differences, it does not resolve the fundamental contradictions and represents more of a short-term balance of interests.

The core content of the agreement includes: The US and China will each reduce certain tariffs to 10%, returning to the conditions reached in the May 2025 negotiations in Geneva, Switzerland. China will conduct a "lawful review" of rare earth export applications but has not committed to relaxing restrictions. The US will lift some export controls on Chinese goods.

The Deep Logic and Strategic Considerations of the US-China Trade Truce

In June 2025, after prolonged negotiations, the US and China officially signed a trade truce agreement. This agreement has been regarded as a rare "breathing moment" in the economic confrontation between the two countries, but it still harbors significant uncertainties.

US President Donald Trump announced the agreement on social media, stating that "major progress" had been made on key issues such as rare earth exports and tariff reductions. At the same time, the Chinese Ministry of Commerce spokesperson confirmed the existence of the agreement but provided different interpretations on certain details, particularly emphasizing the principle of "lawful review" regarding rare earth exports.

This indicates that the US and China have not reached a comprehensive compromise and that the agreement is more of a strategic adjustment.

Since 2022, Sino-US trade relations have plunged to a low point due to tariff disputes and technological decoupling. The US has sought to suppress China's economic development through measures such as imposing higher tariffs and restricting technology exports. Meanwhile, China has adopted reciprocal countermeasures, including strengthening rare earth export controls and raising tariffs on American goods.

Although the June 2025 agreement signifies that both sides have temporarily set aside some of their differences, it does not resolve the fundamental contradictions and represents more of a short-term balance of interests.

The core content of the agreement includes: The US and China will each reduce certain tariffs to 10%, returning to the conditions reached in the May 2025 negotiations in Geneva, Switzerland. China will conduct a "lawful review" of rare earth export applications but has not committed to relaxing restrictions. The US will lift some export controls on Chinese goods.

Potential Impact on China’s Foreign Trade

The trade truce agreement has a significant impact on China’s foreign trade environment. While it eases tensions, the underlying economic competition between the US and China remains unresolved.

The agreement reduces tariffs on certain goods, but the structural issues, such as technological competition and supply chain control, continue to pose challenges. This highlights the need for China to diversify trade partnerships and enhance domestic technological capabilities.

Specific Impacts on China’s Chemical Market

The trade truce agreement has had a particularly significant impact on China's chemical market. Chemicals, as an important part of Sino-US trade, were listed as a key area for tariff adjustments in the agreement.

Under the agreement, US tariffs on certain chemicals have been reduced from 30% to 10%. This will directly reduce cost pressures for Chinese chemical export enterprises, particularly in the areas of basic and fine chemicals. For example, Chinese exports of methanol, propylene, polyethylene, and other basic chemicals will become more price-competitive. Meanwhile, high-value-added pharmaceutical intermediates and specialty chemicals are also expected to expand market share through tariff reductions.

Rare earth resources are crucial raw materials for high-end chemical production, and the agreement’s strict review policy on rare earth exports will help ensure the supply security of raw materials for China’s chemical industry. Additionally, China can enhance the localized utilization of rare earth resources to extend and upgrade the high-end chemical industry chain. For instance, developing high-tech products such as rare earth catalysts and rare earth magnetic materials can enhance the domestic chemical market's independent innovation capability.

With the easing of Sino-US trade tensions, Chinese chemical export enterprises will become more proactive in exploring markets along the "Belt and Road" initiative. These regions are experiencing rapid growth in demand for basic and fine chemicals. For example, the annual growth rate of polyester raw material demand in Southeast Asian countries has exceeded 12%, and African countries' dependency on imported pesticides and pharmaceutical intermediates is also increasing. Chinese enterprises can use the tariff adjustment window to accelerate their market presence in these emerging regions.

Impacts of the US-China Trade Truce on the Chemical Market

Chemical Market Opportunities and Challenges

Despite the trade truce, challenges for China’s chemical market remain significant. On one hand, global economic recovery remains sluggish, putting pressure on export growth. On the other hand, the US has not fully lifted its restrictions on high-end technology and key resources.

To address these challenges, the Chinese chemical industry must focus on strengthening independent innovation to reduce reliance on foreign markets and technologies, expanding investment in "Belt and Road" countries to create a diversified market structure, improving collaboration across the industrial chain to enhance resilience against risks, and accelerating digital and green transformation to increase product value and ensure sustainable development.

The US-China trade truce reflects deeper global economic adjustments. For China’s foreign trade and chemical markets, this is an era full of opportunities and challenges. Seizing this policy window and accelerating global market expansion will be key to the future development of the chemical industry.