In a recent development, U.S. President Donald Trump announced an agreement with Chinese President Xi Jinping to reduce tariffs on China in exchange for Beijing’s crackdown on illicit fentanyl trade, resumption of U.S. soybean purchases, and continued rare earths exports. The meeting between the two leaders in Busan, South Korea, marked the conclusion of Trump’s Asia tour, during which he also highlighted trade advancements with South Korea, Japan, and Southeast Asian countries.
Following the talks, Trump revealed that tariffs on Chinese imports would be lowered from 57% to 47%, achieved by halving the tariffs on fentanyl precursor drugs from 20% to 10%. Trump emphasized Xi’s commitment to curbing the flow of fentanyl, a potent synthetic opioid responsible for numerous overdose deaths in the U.S.
While Trump praised the tariff reduction, only India and Brazil remain subject to higher tariff rates among major U.S. trading partners. In response, Xi emphasized the need for further cooperation, with China’s Commerce Ministry announcing a suspension of certain countermeasures for a year.
The meeting generated optimism in global stock markets, although concerns arose about the sustainability of the trade truce given past setbacks in negotiations. Trump and Xi engaged in discussions on various economic issues, with the aim of reaching mutual agreements while acknowledging occasional frictions between the two superpowers.
In addition to the tariff adjustments, Beijing sought relaxed U.S. export controls on sensitive technology and the reversal of new U.S. port fees affecting Chinese vessels. Trump announced significant upcoming purchases of U.S. soybeans by China and refrained from immediate comments on U.S. concessions.
Notably, China recently purchased its first shipments of U.S. soybeans in several months ahead of the summit. Previous trade deals that mitigated retaliatory tariffs and resumed rare earth magnet supplies from China are set to expire soon. Trump expressed confidence that China would not impose further controls on rare earths.
During his trip, Trump signed agreements with Japan and Southeast Asian nations to diversify rare earth supplies, aiming to reduce China’s dominance in this sector over time. The leaders did not delve into discussions regarding Nvidia’s advanced Blackwell artificial intelligence chip, a departure from earlier speculations about potential collaborations in the AI field.
Furthermore, U.S. Treasury Secretary Scott Bessent disclosed that China committed to purchasing 12 million metric tonnes of American soybeans by January and agreed to buy an additional 25 million tonnes annually for the next three years. Bessent also noted agreements from Southeast Asian countries to procure 19 million tonnes of U.S. soybeans, without specifying a timeline for those transactions.