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Investing.com - A formal written trade agreement between the United States and China is a positive development that should reduce the risk of further misunderstandings, but the truce still remains on "shaky foundations," according to analysts at Capital Economics.
Washington and Beijing have both confirmed the details of a trade deal initially reached earlier this month in London, which will implement a consensus forged in Geneva in May.
A spokesperson from China’s Ministry of Commerce said China will review and approve applications for items subject to export control rules, while the U.S. will cancel a range of existing restrictive measures imposed on China.
The statement came after U.S. President Donald Trump said at a White House event on Thursday that both sides had signed a trade deal, without providing further details.
U.S. Commerce Secretary Howard Lutnick also told Bloomberg Television on Thursday that a "deal was signed and sealed two days ago,” though he did not elaborate on the terms.
The trade understanding will include provisions for China to supply rare earth materials to the United States, while the U.S. will lift restrictions on ethane exports to China.
The finalization of this trade agreement comes as both nations continue to navigate their complex economic relationship, which has fluctuated amid a shifting trade landscape. Meanwhile, geopolitical divisions driving the U.S. and China apart have not gone away, with speculation that the Trump administration would adopt a more isolationist foreign policy stance proving largely unfounded so far, the Capital Economics analysts said.
"[O]ur base case is that U.S. tariffs on China will settle at current levels. But this wouldn’t preclude further U.S. action in other areas, such as export controls and investment curbs," they added.