China tariff cut measures took effect this week after President Donald Trump announced a significant reduction from 145% to 47% following what he described as an “amazing” meeting with Chinese President Xi Jinping. The China tariff cut came as both nations sought to ease tensions, and Trump also secured commitments on rare earths and fentanyl cooperation, along with agreements to boost soybean trade volumes.
China Tariff Cut Sparks Rare Earths Pact, Soybean Trade, and Xi Fentanyl Deal
China Tariff Cut and Rare Earths Deal Breakthrough
The Trump Xi meeting actually produced a commitment from Beijing not to impose restrictions on rare earth exports to the United States for at least one year. Trump declared any concerns over rare earths to be “settled“, and he stated:
“They’re not going to impose the rare earth controls for a period of at least one year.”
U.S. Trade Representative Jamieson Greer had previously warned about China’s restrictions, saying:
“It is an exercise in economic coercion on every country in the world. This will give China control over basically the entire global economy and the technology supply chain.”
The rare earths deal addresses a critical vulnerability right now, as China controls roughly 70% of global production of these materials that are essential for semiconductors, electric vehicles, and even military equipment.
Soybean Trade and Fentanyl Agreement
American farmers will benefit from the soybean trade component, with Trump announcing that China will resume buying “tremendous amounts” of U.S. soybeans “starting immediately.” The fentanyl agreement includes a tariff reduction from 20% to 10% on goods related to fentanyl production, and China has promised to work “very hard to stop the flow” of precursor chemicals.
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Trump had this to say after the Trump Xi meeting:
“It was an amazing meeting. We agreed to almost everything.”
Xi Jinping called for “dialogue over confrontation” in a statement, urging that both sides should maintain regular working-level communication and cooperation on trade issues.
Market Reactions to China Tariff Cut
The China tariff cut sparked some positive market reactions, with stock indices rising and soybean futures moving on the news. However, experts remain cautious about the long-term prospects at the time of writing.
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Deborah Elms, head of trade policy at the Hinrich Foundation, had this to say:
“I have modest expectations for this meeting. I think, no matter what happens this week, we haven’t seen the end of economic tensions, tariff threats, export controls and restrictions.”
Wendy Cutler, senior vice president at Asia Society Policy Institute, noted the truce is “fragile and tensions are certain to heat up again” due to missing structural reforms and unresolved issues.