Trump formalises fentanyl, reciprocal tariff cuts in Xi deal
The moves go into effect on Nov 10
[WASHINGTON] US President Donald Trump announced a cut to fentanyl-related tariffs on imports from China and the continued freeze of some of his reciprocal levies on Chinese goods, formalising key elements of the sweeping trade deal struck with Chinese leader Xi Jinping.
The moves, made in a pair of executive orders issued on Tuesday (Nov 4), go into effect on Nov 10. The fentanyl tariff rate will be halved from 20 to 10 per cent, while Trump has also extended for a year a truce that saw him reduce his reciprocal tariff rate from 34 to 10 per cent.
The extension follows Trump’s October summit with Xi in South Korea, where the two leaders sought to stabilise trade between the world’s two largest economies following escalating levies and export curbs.
The reduced rates mark a significant concession to China. They are part of a broader pact between Trump and Xi that will ease trade restrictions following months of spiralling tariff announcements and export curbs between the world’s two largest economies.
Trump cited China’s pledge to remove export controls on rare earth elements and other critical minerals and address retaliation against US semiconductor manufacturers in explaining his decision to further extend the tariff pause.
China also committed “to purchase United States agricultural exports integral to the economy and general welfare of the United States, including soybeans, sorghum, and logs”, Trump said, adding that Beijing would suspend tariffs on a “vast swath” of US agricultural products.
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On fentanyl, Trump cited progress with China’s efforts to do more to crack down on the trafficking of the deadly drug and the precursor chemicals used to make it.
“The PRC (People’s Republic of China) has committed to take significant measures to end the flow of fentanyl to the United States, including stopping the shipment of certain designated chemicals to North America and strictly controlling exports of certain other chemicals to all destinations in the world,” Trump said in the order.
Trump said that the State Department and Department of Homeland Security would continue to monitor China’s implementation of the agreement.
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“Should the PRC fail to implement its commitments as described in section 1 of this order, I may modify this order as necessary,” Trump said.
That agreement, intended to last for one-year, stabilised what was a turbulent relationship between Washington and Beijing that had them escalating threats in a bid for leverage ahead of the summit. The Trump-Xi deal, however, falls short of any enduring pact, setting the stage for renegotiations in a year and potential disagreements over enforcement sooner.
Still, the full tariff picture remains murky. Several goods are excluded from the baseline levy and other products face preexisting tariffs.
The deal eases what had been a comparative disadvantage for China over some peers. Trump’s tariff rate on China, long considered America’s biggest trading foe and a major geopolitical rival, is now nearly the same as the levies applied to several South-east Asian countries.
The lower rate for Chinese goods is welcome news for US importers, who pay the tariffs and have been caught in the crossfire of Trump’s ad-hoc approach, which has made long-term planning for businesses all but impossible.
The deal, however, risks angering China hawks, who want to see the country isolated for its history of predatory trade practices and dumping. Overall, the deal gives Beijing a similar tariff rate as many other major exporters in South-east Asia.
Trump said he expects to visit China in the first half of next year, and to host Xi in the US after that trip. Those meetings will serve as crucial markers for the status of the truce. The deal also rests under a cloud of legal uncertainty, with the US Supreme Court weighing the constitutionality of Trump’s use of emergency powers to enact country-by-country levies. BLOOMBERG
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