After a brief meeting in South Korea with Chinese leader Xi Jinping, U.S. President Donald Trump announced on Oct. 30 that he had agreed to lower tariffs on Chinese imports in exchange for promises from Beijing on fentanyl, rare earth elements and soybeans.
- The first face-to-face meeting between Trump and Xi since 2019 produced an agreement in which the U.S. will decrease overall duties on Chinese goods to 47%.
- This includes halving the fentanyl-related reciprocal tariffs from 20% to 10%.
In April, when the tariff war between the world’s largest trading nations was at its peak, Trump had cranked up blanket tariffs on Chinese imports to 145%, and China had retaliated with 125% duties on U.S. goods.
However, an Aug. 11 executive order set the rate on Chinese imports entering the U.S. at 30% until Nov. 10. The agreement just announced has come less than two weeks before that deadline.
- As of Sept. 25, reports The Guardian, average U.S. tariffs on Chinese imports had reached 58%, while Chinese tariffs on U.S. goods were at 33%.
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In mid-October, China had announced renewed restrictions on rare earth mineral exports. In response, President Donald Trump said he would implement new 100% tariffs on imports from China starting Nov. 1. Trump backed off on that threat as part of this new framework agreement, hammered out earlier in the week by U.S. and Chinese economic officials in Malaysia.
China also made its first purchase of U.S. soybeans this year on Oct. 29 and agreed to pause its export restrictions on rare earth elements for one year. The two nations also agreed to pause port fees each nation had imposed on the other’s cargo ships for a year.
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The agreement – not yet signed and official – promises a one-year trade deal, to be reviewed annually. CNBC characterized it as “a tangible de-escalation of the contentious trade war between the two superpowers,” but pointed out that the “overall U.S. tariff rate on Chinese imports … will stay at a historically high level” and that the announced agreements “do not amount to a comprehensive trade deal.”
Still, a yearlong pause is a welcome sign of stability for weary importers.
The persistent back-and-forth has shifted business from growth to “wait and see,” which is stagnating to companies and the economy overall, says Chris Anderson, CEO of HPG, PPAI 100’s No. 4 supplier. “The whipsaw effect of back-and-forth tariff announcements, and the posture toward China in particular, makes it difficult to invest in business,” he adds.
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“I’m hopeful that after November 1 we’ll have the clarity and stability companies like ours need to continue operating and innovating with confidence,” says Jeff Roberts, CEO of iClick, PPAI 100’s No. 47 supplier.
