Donald Trump announced a reduction in tariffs on Chinese imports following a meeting with Xi Jinping that he described as “amazing.” Speaking to reporters aboard Air Force One on November 16, 2023, Trump rated the discussions a “12 out of 10” and revealed plans to cut tariffs from 57 percent to 47 percent. This adjustment includes a halving of the tariff rate on fentanyl precursor drugs to 10 percent.
The significance of this meeting, held in Busan, South Korea, extends beyond tariffs. Trump stated that Xi would work “very hard to stop the flow” of fentanyl, a potent synthetic opioid linked to a rising number of overdose deaths in the United States. The agreement indicates a shift towards cooperation, with the Chinese commerce ministry announcing a pause on export controls for rare earth elements for a year. These materials are crucial for various industries, including automotive and aerospace, and have been a focal point in the ongoing trade tensions between the two nations.
Despite the optimistic tone from both leaders, the response in global stock markets was relatively muted. Major Asian indices and European futures experienced fluctuations, with investors weighing the potential long-term implications of the trade discussions. Currently, only Brazil and India remain subject to higher tariffs among major US trading partners.
The meeting lasted over one and a half hours and took place on the sidelines of the Asia-Pacific Economic Cooperation summit. Trump has previously emphasized the importance of reaching an agreement with China, especially after US negotiators indicated they had developed a framework to prevent 100 percent tariffs on Chinese goods. Xi, during the talks, remarked that occasional frictions between the two superpowers are expected and that the objectives of both nations are not inherently incompatible.
In addition to tariff reductions, the discussions touched on easing export controls on sensitive US technology and rolling back new port fees imposed on Chinese vessels. While Trump did not comment on any US concessions, he mentioned that China would start purchasing “tremendous amounts” of US soybeans and other agricultural products “starting immediately.” Reports indicate that China had already secured its first cargoes of US soybeans in several months prior to the summit.
Looking ahead, the White House has expressed hope that this meeting will pave the way for further discussions between the two leaders in the coming year. Trump mentioned plans to visit China in April 2024, followed by a reciprocal visit from Xi to the United States.
Notably, Trump did not address Nvidia’s advanced Blackwell AI chip during the meeting, despite prior speculation that it might be a topic of discussion.
As these developments unfold, the global business community remains watchful of the evolving relationship between the United States and China, two economies that play crucial roles in the international trade landscape.
