U.S. President Donald Trump announced a deal with Chinese President Xi Jinping to reduce tariffs on China in exchange for Beijing’s crackdown on the illegal fentanyl trade, resumption of U.S. soybean purchases, and continued rare earths exports. The meeting between Trump and Xi in Busan, South Korea, marked the end of Trump’s Asia trip, where he also highlighted trade agreements with South Korea, Japan, and Southeast Asian countries.
Describing the meeting as “amazing,” Trump revealed that tariffs on Chinese imports would be lowered to 47% from 57% by halving the tariffs on fentanyl precursor drugs to 10% from 20%. Trump praised Xi’s commitment to curbing the flow of fentanyl, a dangerous opioid responsible for numerous overdose deaths in the U.S.
While Trump praised the tariff reduction, India and Brazil are now the only major U.S. trading partners facing higher tariffs. Xi emphasized further cooperation in statements released by Chinese state media post-meeting. Optimism surrounding a potential trade breakthrough between the U.S. and China led to record highs in global stock markets ahead of the meeting.
Despite the positive developments, concerns lingered about the sustainability of the truce due to past setbacks in trade negotiations. Both countries have engaged in tariff escalations and import restrictions over the years, impacting global trade dynamics.
During the APEC summit in South Korea, Trump and Xi engaged in lengthy discussions, with Xi acknowledging the normalcy of occasional frictions between superpowers. Both leaders expressed willingness to address primary concerns and improve China-U.S. relations.
Aside from reducing fentanyl tariffs, Beijing sought relaxed export controls on U.S. technology and a rollback of new U.S. port fees on Chinese vessels. Trump mentioned China’s commitment to purchasing significant amounts of U.S. soybeans and other agricultural products promptly.
Notably, China recently bought its first batch of U.S. soybeans in months, while previous trade agreements affecting retaliatory tariffs and rare earth magnet supplies are set to expire soon. Trump reassured reporters that China would not impose controls on rare earths, highlighting ongoing efforts to diversify rare earth supplies away from Chinese dominance.
Discussions during Trump’s trip also included pacts with Japan and Southeast Asian nations to diversify rare earth supplies. The leaders did not delve into Nvidia’s Blackwell artificial intelligence chip, contrary to earlier speculation about potential exports. Additionally, U.S. Treasury Secretary Scott Bessent disclosed China’s commitment to purchase substantial amounts of American soybeans in the upcoming seasons, along with agreements from Southeast Asian countries to buy more U.S. soybeans.
