Trump cuts fentanyl tariffs on China to 10% as Beijing delays rare earth curbs

President Donald Trump and Chinese language President Xi Jinping emerged from a high-stakes assembly touting agreements on tariffs and export controls that quantity to a tangible de-escalation of the contentious commerce warfare between the 2 superpowers.

However many particulars about what was achieved stay unclear, whereas different key sticking factors within the U.S.-China commerce relationship seem to not have come up in any respect. The general U.S. tariff price on Chinese language imports, in the meantime, will keep at a traditionally excessive stage.

The agreements struck through the assembly in Busan, South Korea, don’t quantity to a complete commerce deal — although Trump claimed after the assembly that one can be able to signal “fairly quickly.”

He nonetheless hailed the summit with Xi as “wonderful,” and rated it a 12 out of 10.

It was the 2 leaders’ first face-to-face assembly in six years. They spoke for one hour and 40 minutes.

The highest-line outcomes embrace an settlement by the U.S. to right away lower fentanyl-related tariffs on China in half, to 10% from 20%.

Trump instructed reporters on Air Power One after the assembly that he believes Xi is “going to work very onerous to cease the circulation” of the addictive opioid fentanyl and its precursor chemical substances into the U.S. China has repeatedly promised to cut back fentanyl trafficking to the U.S., however has been accused by consultants of not following by.

Trump didn’t present extra particulars. A Chinese language Commerce Ministry spokesperson mentioned in a translated assertion that “either side reached consensus on points equivalent to cooperation in fentanyl management,” with out elaborating.

Trump mentioned the general tariff price on Chinese language items will fall to 47% from 57%.

The tariff lower addresses “a key Chinese language grievance,” mentioned Han Shen Lin, China director at advisory agency The Asia Group, exhibiting that “Beijing’s efforts to curb exports of fentanyl precursors, lengthy unrecognized by Washington, are lastly being acknowledged.”

Trump and Beijing additionally confirmed that China agreed to pause lately introduced export controls on its worthwhile uncommon earths minerals for one yr.

These controls have been introduced on Oct. 9, prompting a livid reply from Trump, who threatened to hike tariffs on China by 100% beginning Saturday.

The U.S. is dropping that tariff menace, Trump confirmed on Air Power One. He added that he believes that the one-year postponement of the Chinese language export controls might be “routinely prolonged.”

However the Chinese language Commerce Ministry’s assertion says solely that Beijing will droop the measures for a yr, after which “research and refine particular plans.”

China additionally made no point out of different export management measures it had imposed earlier within the yr, which stay in place.

Chinese language firms management the vast majority of the worldwide provide chain for uncommon earths, that are vital for producing a variety of merchandise from semiconductors to missiles. Beijing has ramped up restrictions on exports of vital minerals during the last two years, with a selected give attention to limiting their use for army functions by different international locations.

“China’s leverage in uncommon earths and demanding minerals processing will proceed to floor episodically, successfully capping any escalation in bilateral tensions,” Louise Bathroom, head of Asia economics at Oxford Economics, mentioned in a notice Thursday.

Trump additionally mentioned “large quantities” of U.S. soybeans and different farm merchandise might be bought by China “beginning instantly.”

China has been the highest purchaser of U.S. soybeans. Earlier this yr it halted all purchases of the staple crop for months amid the tit-for-tat tariff warfare, costing American farmers billions of {dollars} in misplaced income.

Forward of the Trump-Xi summit, China-owned COFCO purchased three U.S. soybean cargoes for December and January cargo, equating to about 180,000 metric tons of product — although consultants notice that could be a fraction of prior years’ purchases through the autumn harvest. By comparability, in October 2024 China purchased practically 6 million tons of U.S. soybeans, based on USDA knowledge. For all of 2024, China bought practically 27 million tons.

Soybeans are usually not particularly talked about within the Chinese language Commerce Ministry’s assertion, although it says either side reached consensus on “increasing agricultural commerce.”

U.S. tariff investigations on China’s maritime and shipbuilding industries, and Beijing’s countermeasures, may even be delayed for one yr, the Chinese language authorities mentioned after the assembly.

Trump mentioned he might be going to China in April, adopted by Xi’s journey to the U.S., with out specifying a timeline for his Chinese language counterpart.

A number of key points went unaddressed within the assembly, Trump mentioned.

On the sale of Nvidia‘s chips to China, Trump mentioned the 2 sides had mentioned “plenty of chips,” however not probably the most superior Blackwell chips. “They’re going to be speaking to Nvidia and others about taking chips,” he mentioned.

Taiwan was not a part of the dialogue, Trump mentioned.

The 2 leaders additionally prevented the topic of Chinese language buying of Russian oil, a monetary lifeline to the Kremlin because it continues to wage warfare in Ukraine.

“Ukraine got here up very strongly,” Trump mentioned, however “we did not actually talk about the oil.”‘

Trump additionally gave no trace that he and Xi had struck a deal to maintain the favored social media app TikTok from going darkish within the U.S.

China’s authorities mentioned it will “work with the U.S. to correctly resolve points associated to TikTok.”

World shares have been decrease and gold costs rose 1.2% as buyers assessed the ramifications of the commerce truce, which comes after a number of months of financial confrontation.

Whereas the commerce truce is “welcome information,” any indication of addressing underlying structural issues of concern is lacking — equivalent to China’s industrial extra capability and nonmarket financial system practices — mentioned Wendy Cutler, senior vice chairman at Asia Society Coverage Institute.

That implies that the truce is “fragile and tensions are sure to warmth up once more,” Cutler added.

Earlier than the assembly, the 2 leaders struck a conciliatory tone, with Trump calling Xi “an previous buddy” with whom he has a “superb relationship,” and Xi stressing that China’s financial development ambitions wouldn’t undermine Trump’s imaginative and prescient to “Make America Nice Once more.”

Tensions between the world’s two financial superpowers have been on a boil this yr. The most recent escalation got here this month, with Beijing  export controls and Washington threatening to ban software-powered exports to China. 

The U.S. had in current days shared particulars about offers it hoped to attain with China – from proscribing the circulation of fentanyl to the U.S. to TikTok’s divestiture from its Beijing-based mother or father ByteDance. Tariffs, tech curbs and uncommon earths have been additionally on the desk for dialogue.

Heading into the assembly, Xi shook fingers with Trump on the photo-op at Gimhae Air Base in Busan, urging that Washington and Beijing be “pals and companions” in his opening remarks.

Sitting throughout the desk from Trump, the Chinese language chief mentioned that it was a “nice pleasure” to satisfy the U.S. president for the sixth time, including that it was solely “regular” for the 2 financial superpowers to have “frictions every now and then.”

“China’s improvement goes hand in hand along with your imaginative and prescient to Make America Nice Once more,” Xi mentioned, based on a readout by the Chinese language International Ministry.

That conciliatory tone marked a notable shift from Xi’s assembly with the previous U.S. President Joe Biden late final yr, throughout which the speech highlighted extra “inevitable competitors” between the 2 international locations, mentioned Yue Su, principal economist at The Economist Intelligence Unit.

Whereas the settlement nonetheless lacks a “robust structural basis” and will simply be reversed, either side are prone to keep it up within the close to time period to sign goodwill, Su added.

— CNBC’s Sam Meredith contributed to this report.