Rather than advancing the U.S.-China relationship, the concessions that President Trump and President Xi Jinping of China agreed to in their meeting in South Korea on Wednesday appear to have largely rolled back the clock, returning to the terms of an earlier truce.
Mr. Trump agreed to reverse some of his tariffs and paused new fees on Chinese ships. China said it would suspend the rollout of rare earths restrictions introduced in October, and return to buying U.S. soybeans, in addition to a newer promise to crack down on shipments of chemicals used to make fentanyl.
But one of the reversals from the United States was more notable in the precedent it set. The Trump administration agreed to pause for one year a rule that expanded the number of Chinese companies restricted from access to advanced technology. The rule, issued just four weeks ago, extended the reach of the “entity list,” a kind of trade blacklist for foreign companies that pose a national security threat.
Former officials and analysts said Thursday that the move appeared to be one of the first concessions the United States had made on national security-related technology controls as part of a trade negotiation. They called it a potential breakthrough for the Chinese side, which has long pushed to negotiate with the United States over these types of measures, known as export controls.
Christopher Padilla, who served as an export control official in the George W. Bush administration, said it was a significant shift for U.S. policy. Chinese officials have consistently asked in talks with many presidential administrations for export control measures to be rolled back, he said.
“We all had the talking points,” Mr. Padilla said. “The first one is: ‘That’s a national security issue, and we’re not going to discuss it in a trade negotiation.’”
“Export controls have now become a tradable item in the relationship,” Mr. Padilla added. “You’ve discarded decades of precedent.”
Brett Fetterly, a principal at the Asia Group consultancy and the former national security adviser to Ben Sasse, the Republican former senator, said that Beijing had succeeded in this summit in its long-term goal of tying national security-focused export controls to broader trade negotiations.
“Technology competition now defines the U.S.-China relationship, and on this point President Xi secured key U.S. concessions,” Mr. Fetterly said.
A White House spokesman pushed back on the idea that the agreement was out of step with negotiations under prior administrations. “Any notion that President Trump is willing to make trade-offs between our national and economic security is flat-out false,” said Kush Desai, the deputy press secretary. “The administration made no reversals to America’s decades-old export control policies on any specific product or for any countries.”
The administration appeared not to have made larger concessions on U.S. export controls that some critics had feared. As he flew to South Korea on Wednesday, Mr. Trump suggested that he would discuss the sale of Nvidia’s cutting-edge Blackwell with Mr. Xi, a proposal that drew swift rebukes from Republican and Democratic lawmakers. In remarks on his return flight, Mr. Trump said that he and Mr. Xi had discussed Chinese chip purchases, but “not the Blackwell.”
Many business groups praised a return to greater stability in the U.S.-China relationship, which would help encourage trade and growth. But some analysts said the Trump administration may have had little choice but to roll back U.S. technology controls given China’s chokehold on critical minerals. Last December, Beijing introduced its first curbs on rare earth mineral exports, which it expanded in April and again in October in response to Mr. Trump’s trade war.
China dominates the mining and processing of rare earth minerals, and the magnets made from them that are common in batteries and motors. The Chinese curbs threatened the supply chains of global makers of cars, planes, munitions and semiconductors, and some companies were forced to halt production lines. Scott Bessent, the Treasury secretary, had called the restrictions “a bazooka at the supply chains and the industrial base of the entire free world.”
With the renewed tensions with China this fall, industry executives say supplies of minerals and magnets have once again been running short.
Some analysts say that China’s decision to limit exports of rare earths was a natural consequence of Washington’s technology controls, which used a similar global licensing system to limit China’s access to advanced chips. After so many years of being the target of restrictions, China sought to develop powerful controls of its own, they say.
Emily Benson, the head of strategy at Minerva Technology Futures, a consultancy, said it was “sort of surprising” that the United States didn’t seem to anticipate that other countries would develop similar systems. She added, “It was just a matter of time.”
Other have pointed fingers at the Trump administration’s behavior toward China. They say it was Mr. Trump’s aggressive threats of tariffs this spring that gave the Chinese the opportunity to try out their new approach, and the administration’s lack of a coherent strategy that gave the Chinese an opening to press for long-desired changes.
Some have pointed to the waning influence of the National Security Council, which would typically coordinate strategy and policies on China. The N.S.C.’s influence has been greatly reduced in the Trump administration, after multiple officials were fired for suspicions of political disloyalty.
Various U.S. departments have sometimes appeared uncoordinated in their measures against China this year. And Chinese actions in response have seemed designed to telegraph the message that any measures taken by the United States to clamp down on China will now be aggressively matched by Beijing.
After Mr. Trump introduced high tariffs in April and China put in place its rare earth curbs, the two countries reached a tentative truce in Geneva in May. But the day after that meeting, the U.S. Department of Commerce issued new guidance saying that the use of A.I. chips made by Chinese tech firm Huawei anywhere in the world was an export control violation. The announcement rankled China and led it to clamp down on rare earth exports again.
The countries held a series of meetings in other European capitals this summer to try to stabilize the relationship. But shortly after a phone call between Mr. Trump and Mr. Xi in September, the United States released its rule extending the impact of the entity list to majority-owned subsidiaries, and the Chinese once again responded angrily. In October, Beijing imposed expansive global controls on the trade in minerals and products made with them.
Chinese officials claimed that U.S. measures like the 50 percent entity list rule had violated a consensus struck in their bilateral meetings. Some U.S. officials privately grumbled about the Commerce Department’s timing and lack of coordination. But publicly, the United States insisted it had not made promises to withhold the imposition of export controls.
In an interview on CNBC last week, Jamieson Greer, the U.S. trade representative, said that the Chinese were “trying out a lot of different narratives when the reality is, they just want to exert economic control on the world.”
“They’re using anything else that has happened as a pretext,” he said. He added that the United States had promised to reduce its tariffs in return for China allowing the free flow of rare earths. “We kept that promise, and they have not kept theirs.”
With the president’s meeting with Mr. Xi, the U.S. side appears to have made more explicit concessions. A White House spokesman confirmed Thursday that the United States had agreed to pause the expansion of the entity list to cover majority-owned subsidiaries for one year.
For some, the move is welcome. Some tech executives and lobbyists had criticized the 50 percent rule, saying the due diligence it requires is onerous or impossible.
Sean Stein, the president of the U.S.-China Business Council, which represents American companies doing business in China, said in a statement that the 50 percent rule’s reversal, and Beijing’s decision to pause its October rare earth controls, was “especially welcome news.” He also called the broader trade announcement “very encouraging.”
“America’s reduction of the fentanyl-related tariffs and China’s commitment to take strong action to curb fentanyl precursors have paved the way for a reopening of China’s market for U.S. agriculture and energy and a wider, mutually beneficial trade agreement,” Mr. Stein said.
The 50 percent rule greatly expanded the reach of the entity list, freezing trade for some companies. According to Wirescreen, a data platform focused on China, the rule means that the entity list has grown from roughly 1,300 China-related parties to more than 20,000.
People familiar with the situation said that the Commerce Department had described the change to others in the administration as correcting a loophole, and that officials in the Treasury Department and elsewhere had been surprised by the ultimate impact of the policy. A U.S. official said that Commerce and Treasury were coordinated in their actions.
Some U.S. officials and analysts argue the change has been needed to stop targets of the entity list from easily sidestepping the impact of U.S. sanctions by shifting business to their subsidiaries instead. Mr. Padilla said the standard was used for other government sanctions lists, like controls on military hardware administered by the State Department and financial sanctions administered by the Treasury Department.
“If you’re going to sanction a company but you don’t at the same time sanction majority-owned subsidiaries, that doesn’t make a lot of sense,” he said. “From a practical point of view, this was a loophole that needed to be closed.”