Commerce Secretary Howard Lutnick, back in Washington after two days helping to negotiate a US-China trade framework in London, said Wednesday that Trump gave his team permission to back off its aggressive stance against China to get a deal done.
Lutnick told CNBC in his first interview since the announcement of the US-China trade agreement late Tuesday night that after 25 hours of negotiations over two days with his Chinese counterparts, the world’s two largest economies are in a better place now after a series of escalations over the past month. Both countries, accusing one another of violating the terms of the previous deal agreed upon in Geneva last month, had increased export restrictions on various goods.
“The Chinese had these rare-earth magnets and they were slow-rolling it. When they didn’t deliver the rare-earth magnets, we put on our countermeasures,” Lutnick said. “We were at mutual-assured annoyance.”
He said the talks were respectful, without any yelling or screaming, and both countries believe the outcome was a win-win.
“But we needed to make sure when they pulled out their card with these rare-earth magnets, we put in ours that said, ‘look you just can’t do that to America. America’s too great, too strong,’” Lutnick said.
He said, for example, the Trump administration could have subpoenaed Chinese banks to open their records and “see all the things they had done wrong.” And he noted the White House placed curbs on ethane exports to China in retaliation.
“Ethane makes plastic. We supply 98% of their ethane. No ethane, no plastic. Imagine trying to run an economy with no plastic,” Lutnick said. “If you want to annoy us, the United States under Donald Trump is strong enough to annoy you back equally.”
Instead, Lutnick said Trump opted to “go all positive.”
“He created the right environment for us to do a very positive deal with the Chinese,” Lutnick said.
He noted that China has agreed to immediately approve licenses for any US company that requests rare-earth magnets, used in a host of electronics, automobiles, contrast dyes for MRIs and jet engines. And in exchange the United States will remove some of its export restrictions, including ethane – but short of powerful AI chips that the administration believes pose a national security threat if China were able to buy them.
Lutnick even said the negotiating room at the opulent Lancaster House provided the team a level of familiarity.
“The room we were in, I never felt more comfortable, because every inch of it was gold-leafed,” he said. “It was the perfect place to negotiate a Donald Trump deal.”
Still, Lutnick cautioned, the United States maintains high tariffs on China and a number of remaining export controls. Despite the “rare-earth card” that Chinese Premier Xi Jinping played, Lutnick said, “President Trump holds just as many cards, and because he has the biggest economy now, he holds more cards.”
A shift in focus
The Trump administration will shift its focus on other trade deals now that it has finalized a framework for an agreement with China. Those next agreements could come as early as next week, Lutnick said.
“There are so many coming but when you’ve got (Treasury Secretary) Scott (Bessent), (US Trade Representative) Jamieson (Greer) and I spending 25 hours locked in a room with the Chinese, we’re not really doing the other deals,” Lutnick said.
“You’re going to see deal after deal, they’re going to start coming next week and the week after and the week after. We’ve got them in the hopper.”
Lutnick said the White House’s trade negotiating team is in “good shape” on trade agreements with a number of countries. Bessent has said the administration is in active negotiations with 18 trading partners after reaching tentative agreements with the United Kingdom and China.
Despite many weeks of negotiations since Trump paused his “reciprocal” tariffs on April 9 — with a July 8 deadline rapidly approaching — the administration continues to promise looming deals with little progress to show for it. Lutnick said Trump is in no rush to make any deals, preferring to hammer out better agreements that benefit American businesses and consumers.
“Good shape isn’t good enough for the United States of America. We want great deals that are fundamental for America,” Lutnick said. “We can get them done. We need to open these other countries’ markets. Our farmers, our ranchers, our fisherman, they are going to have just a great time. Our machinists are going to sell a lot of equipment overseas. Boeing always does amazingly well in these deals.”
The key factor, Lutnick said, is opening up US exports to foreign markets that impose tariffs and other non-tariff trade barriers such as taxes and export controls that limit American companies’ access to those countries.
“This is the key to us: Can we open up our exports and end this nonsense of a $1.2 trillion trade deficit? And that’s what we’re working on,” Lutnick said. “We just want to make sure they’re the best deal we can possibly make. We don’t want to rush. And Donald Trump isn’t going to accept the rush. He only accepts the best from us, and we’re going to give it to him.”
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