US and China reach tariff deal as Donald Trump hails 'excellent' relationship with Xi Jinping

The US president revealed China would supply "full magnets, and any necessary rare earths" whilst America would permit Chinese students to attend US universities.

"We are getting a total of 55 per cent tariffs, China is getting 10 per cent," Trump said, adding: "Relationship is excellent!"

A White House official said the 55 per cent figure combines Trump's baseline 10 per cent "reciprocal" tariff on imports from most US trading partners, 20 per cent on Chinese imports linked to fentanyl-related punitive measures, and pre-existing 25 per cent levies from Trump's first term.

Trump later posted: "President Xi and I are going to work closely together to open up China to American Trade.

"This would be a great WIN for both countries!!!"

The agreement emerged from two days of marathon talks in London, with US Commerce Secretary Howard Lutnick saying negotiators had put "meat on the bones" of last month's Geneva agreement to ease bilateral retaliatory tariffs that had reached "crushing triple-digit levels".

The framework agreement followed a rushed meeting in London starting on Monday, after a call last week between Trump and Xi broke a standoff that had developed weeks after their preliminary Geneva deal.

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That earlier agreement had faltered over China's continued restrictions on critical minerals exports, prompting Washington to respond with export controls on semiconductor design software, aircraft and other goods to China.

Lutnick said the London agreement would remove restrictions on Chinese exports of rare earth minerals and magnets and some recent US export restrictions "in a balanced way".

Meanwhile, China's Vice Commerce Minister Li Chenggang confirmed a trade framework had been reached in principle that would be presented to both leaders.

Amid the tariff war between the planet's two largest economies, the World Bank has slashed its global growth forecast for 2025 by just under half a percentage point to 2.3 per cent, citing higher tariffs and heightened uncertainty as a "significant headwind" for nearly all economies.

Josh Lipsky of the Atlantic Council's GeoEconomics Center said the two sides had left Geneva with fundamentally different views of the agreement's terms.

"They are back to square one, but that's much better than square zero," Lipsky said.

And despite Trump's lauding of the Chinese today, it remains unclear just how long a comprehensive deal will take to come together.

An August 10 deadline, set in Geneva, is still in place - and if it is not met, tariff rates could snap back to 145 per cent on the US side and 125 per cent for China.