President Donald Trump made a unprecedented concession in his landmark deal with Chinese chief Xi Jinping Thursday: In alternate for guarantees that China will crack down on fentanyl, the United States will shave 10% off the tariffs it prices on Chinese items.
On the floor, it’s a promising deal that would restore a number of the commerce that tariffs had stymied between the world’s two largest economies. The discount will deliver the minimal tariff on Chinese imports down to 20%, and the typical tariff fee will fall to round 47%. That’s lofty in contrast to many different US buying and selling companions however nonetheless extra in line with the remainder of the world.
It may give some reduction to US shoppers, and it means Chinese items can shed the outcast standing within the United States that Trump’s excessive tariffs had imposed on them.
But the tariff discount is additionally a big gamble for the Trump administration, which has encountered a persistent downside in its unprecedented commerce battle with China: Trump has been bested by Xi in the trade war at each flip. Even the truth that they met in individual Thursday means Trump has already given into China’s calls for. And, as historical past has confirmed in these on-again, off-again offers, it’s not clear the United States will get something critical again by giving in on fentanyl tariffs.
Meanwhile, Trump dangers additional eroding America’s relationship with its key allies whereas gaining a friendlier relationship with its chief financial adversary.
Trump is betting this time will likely be totally different. History suggests in any other case.
Trump needed four main outcomes from his tariffs on China: A discount in fentanyl coming into the United States, a return of producing to the United States, restoration of the stability of commerce and a sale of TikTok’s US belongings.
The administration has made actual progress on all 4: China has pointed to sturdy actions it has taken towards stopping the export of the foundational chemical substances used to make fentanyl. Dozens of firms have promised multibillion-dollar investments in US manufacturing. The US-China commerce hole hit a 21-year low in August. And Trump and Xi agreed to the framework of a TikTok deal.
But the frosty relationship has additionally brought on main issues for the United States. China has restricted the export of rare-earth minerals – essential parts in electronics and navy gear. It has refused to purchase US soybeans, devastating American farmers. And it has made life harder for some key US companies by launching antitrust investigations. China additionally has put in place hefty tariffs of its personal on US imports.
Despite a number of rounds of talks with US commerce negotiators, China has continued to slow-walk guarantees to the Trump administration. Rare earths, particularly, turned a key sticking level, and earlier ensures of a free-flowing rare-earth market by no means materialized. Beijing has even tightened its controls by increasing its restrictions earlier this month.
Under Thursday’s deal, China agreed to roll again these newly imposed guidelines, although the preliminary restrictions unveiled in April seem to stay in place.
Meanwhile, TikTok’s future within the US stays unsure after rounds of commerce talks between the 2 nations. Beijing stopped in need of confirming a last deal on TikTok has been reached following the Xi-Trump assembly, pledging solely to work with the US to “properly address” the problem.
Trump has regularly acknowledged that China usually fails to maintain up its finish of the cut price – together with when he announced in November 2024 that he would elevate tariffs on China due to the fentanyl disaster.
“I have had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States – But to no avail,” Trump posted on Truth Social a number of weeks after Election Day. Then President-elect Trump claimed that Chinese officers promised him the nation would execute drug sellers caught funneling medication into the United States however “never followed through.”
So why would Trump make a deal with China on fentanyl now if Xi retains reneging?
First, China has taken honest-to-goodness motion on fentanyl. For instance, the nation over the summer time added two extra parts used to make fentanyl to its record of managed substances. When prison networks tailored and started promoting these parts on the black market, China labored to thwart these exports, too.
Trump on Thursday cited China’s “very strong action” in cracking down on fentanyl as a motive for reducing US tariffs on Chinese items.
It seems that some progress has been made on reducing fentanyl emanating from China lately – and there’s some restricted proof that China’s actions are making an impression since Trump’s tariffs went into impact. The US Drug Enforcement Agency in an annual report launched in May stated fentanyl purity declined all through 2024, constant with indications that fentanyl cooks in Mexico have been having bother acquiring key precursor chemical substances. US Customs and Border Protection have additionally reported that fentanyl stopped on the border was down in 2024 and is on tempo to fall once more in 2025.
Trump could or could not agree that China has made progress on fentanyl, however he sounded a distinct observe on the topic this week than he has sung up to now. He claimed Wednesday that “China is going to be working with me” on proscribing the drug.
“I believe that they’re going to help us with the fentanyl situation,” Trump stated. “They’re going to be doing what they can do.”
Second, China holds important leverage over the United States. Trump’s tariffs have backfired in quite a few methods, together with by angering US farmers – a key voting bloc – and making a rare-earth scarcity. China has additionally refused to totally open up their market to American AI chips, a significant Trump aim to assist cement US dominance in synthetic intelligence.
Tariffs stay one key lever that Trump can pull, whilst China has discovered markets exterior the United States keen to purchase its items, blunting the harm Trump’s levies have imposed.
Still, lowering tariffs represents one key Chinese demand. Trump’s assembly with Xi was one other.
Giving up a few of that floor – notably if China has proven some goodwill on fentanyl – offers Trump some capacity to get what he desires out of those negotiations. In a imprecise assertion on Thursday, China stated it can make “corresponding adjustments” to its countermeasures on fentanyl-related tariffs after Trump agreed to minimize the levies by half.
A possible downside for the United States: The different two nations on which the Trump administration has imposed fentanyl tariffs – Mexico and Canada – in all probability watched Thursday’s announcement with a raised eyebrow and a few raised blood stress.
Both nations have additionally made actual efforts to prohibit fentanyl coming over the US border. And fentanyl coming in from Canada has by no means posed a significant downside, making up lower than 1% of total fentanyl coming into the United States.
Nevertheless, Trump has threatened to elevate Mexico’s and Canada’s tariffs whereas he is lowering tariffs on China. The deal may enhance America’s relationship with its chief financial adversary whereas angering key allies and its two largest buying and selling companions.
Meanwhile, the discount in tariffs may assist Americans who’re paying the value. Albeit slowly, tariffs have raised costs within the United States. Any discount will likely be welcome information for inflation-wary shoppers.
NCS’s John Liu and Simone McCarthy contributed to this report.