The United States and China have reinstated a fragile trade truce, but economists say the so-called victory may be little more than a headline grab.

President Trump unveiled the new agreement on Truth Social Wednesday, claiming Beijing will front-load critical rare-earth supplies in exchange for a 55% U.S. tariff on Chinese imports.

In return, China will impose just a 10% duty on American goods.

That disparity raised immediate questions. Markets commentator The Kobeissi Letter pointed out it’s unclear whether the U.S. tariff is increasing from the existing 30% or simply being repackaged.

BREAKING: Initial details of the US-China trade deal include:

1. undefinedTotal of 55% tariffsundefined for US
2. 10% tariffs for China
3. Any undefinednecessary rare earthsundefined will be supplied by China
4. Rare earths to be supplied upfront by China
5. US to allow Chinese students to attend US…

undefined The Kobeissi Letter (@KobeissiLetter) June 11, 2025

Economist Peter Schiff was more blunt.

"From what I can tell, the deal centers on both sides retreating from positions implemented after the war started. If so, what victory has the U.S. really won from this war?" he asked.

Schiff also challenged Trump’s tariff math. “Trump is boasting that ‘we are getting a total of 55% tariffs, China is getting 10%.’ But ‘we are getting’ really means ‘we are paying.’

This tax hike makes Chinese goods 55% more expensive for the Americans who buy them.”

With regard to his deal with China, Trump is boasting that undefinedwe are getting a total of 55 per cent tariffs, China is getting 10 per cent.undefined But undefinedwe are gettingundefined really means undefinedwe are paying.undefined This tax hike means Chinese goods will be 55% more expensive for Americans who buy them.

undefined Peter Schiff (@PeterSchiff) June 11, 2025

Markets weren’t sold either. The Dow Jones finished flat on Wednesday, while the S&P 500 slipped 0.3% in what was a lukewarm reaction reflecting investor doubt about the deal.

Li Chenggang, China’s top negotiator, offered only a vague statement that the two sides had reached an "agreement in principle."

Rare earths were the real prize

Despite the murky framework, one element of the deal stood out: a renewed supply of rare earths from China, which had used its dominance over these materials as a key leverage point.

Investors Observer reported this week that Chinese export restrictions on rare-earth elements had become a major threat to the U.S. economy and a key motivator for restarting talks.

Although China officially restricted only seven of the 17 critical rare earths, industries were already rattled. The auto sector, in particular, pressed the Trump administration to act.

According to U.S. Geological Survey data, China produced nearly 400,000 metric tons of rare earths last year, accounting for 69% of global output.

With the U.S. deeply dependent on those materials — used in everything from EVs and wind turbines to missile guidance systems — experts warned it was only a matter of time before the restrictions would wreak havoc on the economy.

So while the deal may have eased fears of a full-blown trade meltdown, the future of global commerce remains as murky as ever.

Real-time estimates from the Atlanta Fed show U.S. GDP could grow 3.8% in the second quarter, a rebound after Q1’s surprise 0.3% contraction, the first since 2022.

But with rising tariffs, fragile supply chains, and uncertainty around China’s next move, markets are bracing for more volatility in the second half of the year.