U.S. President Donald Trump announced on Thursday an agreement with Chinese President Xi Jinping to reduce tariffs on China in return for Beijing’s crackdown on the illegal fentanyl trade, resumption of U.S. soybean purchases, and continuation of rare earths exports. The two leaders held face-to-face discussions in Busan, South Korea, marking the conclusion of Trump’s rapid tour of Asia, during which he highlighted trade breakthroughs with South Korea, Japan, and Southeast Asian nations.
Describing the meeting as “amazing,” Trump revealed that tariffs on Chinese imports would be lowered from 57% to 47% by halving the tariff rate on fentanyl precursor drugs. He emphasized Xi’s commitment to halt the flow of fentanyl, a potent opioid responsible for numerous overdose deaths in the U.S. Trump expressed confidence in China’s efforts, leading to the tariff reduction.
While Trump praised the tariff decrease, only India and Brazil currently face higher tariff rates among significant U.S. trading partners. Xi emphasized the importance of further cooperation in statements reported by Chinese state media post-meeting. The global stock markets had surged before the meeting on hopes of resolving the trade war between the two largest economies, but concerns arose about the sustainability of the truce as equity markets dipped.
The talks, held at an airbase in South Korea during the Asia-Pacific Economic Cooperation (APEC) summit, lasted nearly two hours. Trump and Xi discussed primary concerns and the potential for improved China-U.S. relations. Beijing also sought relaxation of U.S. export controls on sensitive technology and a rollback of new U.S. port fees on Chinese vessels. Trump hinted at significant purchases of U.S. soybeans by China and other agricultural products.
China recently purchased its first loads of U.S. soybeans in months, while previous trade deals, which eased retaliatory tariffs and revived rare earth magnet exports from China, are set to expire soon. Trump reassured that China would not impose controls on rare earths. Additionally, Trump inked agreements with Japan and Southeast Asian nations to diversify rare earth supplies, aiming to reduce China’s dominance in this sector.
The leaders did not discuss Nvidia’s cutting-edge Blackwell artificial intelligence chip extensively. U.S. Treasury Secretary Scott Bessent disclosed that China committed to buy a substantial amount of American soybeans over the next few years, with other Southeast Asian countries also agreeing to purchase U.S. soybeans.
