President Trump announced Thursday that the US would halve its fentanyl-related tariffs on Chinese goods as part of a reset in relations that includes China stepping back from its promise to restrict rare earth mineral exports for a year.
Other parts of the limited agreement Trump outlined after a summit with Chinese President Xi Jinping in South Korea include increased purchases of US soybeans, more actions from China on the issue of fentanyl, the suspension of some shipping fees, and a visit by Trump to China now penciled in for next April.
Trump promised that additional details would be forthcoming and told reporters on Thursday that it had been a highly productive meeting, adding that a formal deal would be signed “pretty soon.”
The terms outlined are likely to provide markets with a measure of stability in the relationship between the world’s two largest economies, at least into next year.
“The deescalation takes the immediate threat of large tariff hikes off the table, removing a key downside risk to the near-term outlook,” Capital Economics noted in an analysis Thursday, adding that underlying issues remain unresolved and, as such, “both sides will continue to pursue wider decoupling efforts.”
President Donald Trump and China’s President Xi Jinping shake hands as they arrive for talks at the Gimhae Air Base in Busan, South Korea on October 30. (ANDREW CABALLERO-REYNOLDS/AFP via Getty Images) ·ANDREW CABALLERO-REYNOLDS via Getty Images
The summit in Busan was the first face-to-face meeting between the two leaders of Trump’s second term and lasted a little under two hours.
A clear headline for markets was the tariff reduction, with Trump announcing that he would cut the current 20% tariff on China imposed over fentanyl to 10% “effective immediately.”
The US has imposed a wide array of tariffs on China, from those 20% fentanyl-specific duties to 34% “reciprocal” tariffs to other sector-specific duties. The Peterson Institute for International Economics estimates that the average US tariffs on Chinese exports stood at 57.6% before the meeting.
Trump said the changes mean the new overall rate is about 47%.
Also key was the issue of rare earth minerals. By some estimates, China controls 90% of the world market for processing these precious metals that are crucial to modern electronics.
China rattled global markets recently by announcing plans to restrict their exports. As part of Thursday’s agreement, “they’re going to keep those flowing” for at least a year, said Trump trade representative Jamieson Greer.
President Donald Trump and Chinese President Xi Jinping shake hands as they depart their meeting. (Andrew Harnik/Getty Images) ·Andrew Harnik via Getty Images
China’s Commerce Ministry on Thursday confirmed some of the terms, such as the lowering of fentanyl tariffs. Chinese state media offered a few additional details and struck an optimistic tone, saying the meeting would allow the two sides to build a “solid foundation for bilateral ties.”
Not apparently agreed to in the talks was the closely watched market issue of semiconductors. Trump promised only that China and Nvidia (NVDA) would later talk among themselves about the chipmaker’s future access to the country.
“They’re going to be discussing that with Nvidia to see whether or not they can do it,” Trump said of China, describing his role as that of the “referee” but downplaying the chances of more advanced Blackwell chips being available anytime soon, saying “we’re not talking about the Blackwell.”
Also not finalized is TikTok. China’s Commerce Ministry said work to finalize the deal to spin off the app’s US business and keep it available for Americans will continue.
There appeared to be little progress on China’s relationship with Russia and its role in the war in Ukraine. Trump said he and Xi agreed to “work together” on the issue but added “there’s not a lot more we can do” given China’s long history of purchasing Russian oil.
Also, according to Trump, “Taiwan never came up.”
Other issues saw more immediate attention, with Agriculture Secretary Brooke Rollins confirming even before the meeting that China had renewed purchases of “multiple ships of American soybeans.”
That was a top item on Trump’s agenda after China recently stopped purchases altogether, hurting the bottom lines of US soybean farmers to the point that it was a situation described by some as a “Farmageddon.”
On social media, Trump teased what he said could be new energy purchases from China, saying “a very large scale transaction may take place” around purchasing oil and gas from Alaska.
Trade Representative Jamieson Greer and President Donald Trump speak to members of the media aboard Air Force One on October 30 following a high-stakes meeting with Chinese President Xi Jinping. (Andrew Harnik/Getty Images) ·Andrew Harnik via Getty Images
“Progress in US-China trade talks today marks an undeniably positive step,” noted Louise Loo, the head of Asia Economics at Oxford Economics, and “sets the stage for deeper, more predictable engagement heading into 2026.”
But she was quick to note that “the détente is fragile given the high risk of policy missteps and mutual misreadings.”
That larger takeaway from the gathering with China — which capped off an Asian swing that took President Trump from Malaysia to Japan to South Korea and also saw the president threaten minutes before meeting with Xi to resume US nuclear testing for the first time in decades — was some stability in the relationship.
“We have a deal,” Trump declared Thursday before offering a reminder that “every year we’ll renegotiate the deal.”
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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