China agrees to lift chip export ban in landmark US trade deal
The White House has announced that China will begin easing restrictions on exports of automotive computer chips under a new trade agreement reached between president Donald Trump and president Xi Jinping.
The deal, finalized during talks in South Korea, marks a major de-escalation in US–China trade tensions following months of retaliatory tariffs and global supply chain uncertainty.
Under the agreement, China will lift its export ban on legacy automotive chips produced by Nexperia – a move expected to stabilise car production and ease supply shortages that have disrupted automakers worldwide. Beijing will also suspend recently introduced export controls on rare earth minerals for one year, offering relief to industries dependent on these materials, including automotive, aerospace, and defence manufacturing.
Firms are still scrambling to find out what it means for them, said Sigrid De Vries, director general of the European Automobile Manufacturers’ Association.
“The Chinese authorities have said they would start exporting eligible chips again, that they’re investigating and making lists of companies… but the scope and the conditions are as yet unclear.”
She added that China easing the automotive chip ban was positive news because “supply shortages were imminent.”
But she warned that “they are still looming” because of the earlier disruption, adding that it remains unclear whether vehicle prices will be affected.
Mark McCarthy, chief revenue officer at Basware, commented: “Trade wars and tariff uncertainty introduce volatility into the global economy. For major enterprises, especially those with complex supply chains or international footprints, this creates hesitation around IT spending. CIOs and CFOs may want to delay large IT investments, reassess strategic priorities and scrutinize every dollar of spend.
Organizations are working on contingencies, but in a turbulent environment, smart enterprises don’t stop investing, they get more focused on their spending and look for greater ROI on every purchase. This means looking to drive even more cost efficiency, investing in areas to mitigate operational risk, accelerating automation to do more with less, and increasing agility and visibility over the tech stack.
Michael Joseph, compliance expert at Napier AI, commented: “Tariffs create a breeding ground for financial crime. Fluctuating tariffs, while designed to serve economic and national security objectives, have created unintended consequences. As supply chains reorganize in response, new vulnerabilities for money laundering and other financial crimes have emerged. Our research shows that money laundering and terrorist financing cost the US economy over $600bn per year on average.”
“Tariff differentials between countries create strong incentives for trade diversion and misrepresentation. When goods face a 10% tariff from one country but potentially up to 145% from another, criminal organizations can exploit these differences through invoice manipulation, falsifying country of origin documentation, or routing shipments through third countries to conceal their true origin. These techniques are hallmarks of trade-based money laundering but can become more difficult to detect during periods of extreme volatility.”
In agriculture, China has committed to purchasing 12 million tonnes of US soybeans before the end of 2025 and 25 million tonnes annually over the next three years—restoring trade volumes to pre-ban levels. This decision reopens a vital export market for American farmers after months of restricted access that had triggered renewed government support programs.
The agreement also includes new measures on drug control, with the US set to lower specific tariffs in exchange for China’s pledge to take “significant measures” to curb the production and export of chemicals used in manufacturing fentanyl. The synthetic opioid has been at the centre of the U.S. overdose crisis, with many precursor materials sourced from China.
US treasury secretary Scott Bessent said the deal signals a willingness to stabilize economic relations, while warning that “China has shown itself to be an unreliable partner.”
Industry groups have broadly welcomed the move but cautioned that full recovery of global supply chains will take time.