U.S. President Donald Trump stated that he will decrease fentanyl-related tariffs on China in advance of a long-awaited summit with his Chinese counterpart, Xi Jinping, in South Korea this week.
He informed reporters aboard Air Force One on Wednesday that fentanyl flows into the U.S. and “farmers” will be part of the issues that he will address with Xi on Thursday.
Trump responded to whether the possible one-year delay in Beijing enforcing its rare earth export restrictions would suffice to elicit further concessions on the part of the U.S., Trump added that “we haven’t talked about the timing yet, but we are gonna work out something.”
A fragile trade truce between the two leading economies of the world that involves a reduction of tariffs on mutual goods is expiring on November 10, unless they reach an agreement to have another extension.
Trump has even threatened an extra 100 percent tariff on Beijing on November 1.
The remarks were made by Trump following the report by the Wall Street Journal on Tuesday, claiming that the U.S. would reduce the 20 percent fentanyl related tariffs on Chinese imports by half, on the condition that Beijing would crack down on the export of the chemicals that make fentanyl.
However, Washington has to reduce the fentanyl tariffs against Chinese products by 10 percent. This would reduce the average tariff on most of the Chinese imports of about 55 percent to a more reasonable level of about 45 percent.
Trump added that would Taiwan would rely on the agenda, “I don’t know if we’ll even speak about Taiwan. He may want to ask about it. There is not that much to ask about it.”
While responding to a question pertaining to exports of Nvidia’s Blackwell chips to China, Trump said that “I think we may be talking about that with President Xi.”
The meeting of the two leaders is preceded by the fact that bilateral tensions have intensified over the past few weeks as Beijing has heated the rhetoric around rare earth export restrictions, which has prompted Washington to respond by imposing port charges on Chinese ships and threatening to impose software-related export restrictions.
Trump will attend an Asia-Pacific Economic Cooperation, or APEC, gathering on the fringes of the meeting and is set to meet Xi, their first in-person meeting since Trump returned to the office in January.
The Chinese Foreign Ministry indicated in a short statement last Friday that Xi will make a state visit to South Korea on October 30 and November 1, without indicating that he would meet Trump.
Trump stated on Wednesday that his ties with China are “very good,” saying that “we are going to have a great meeting with China’s Xi.”
The U.S. president launched his whirlwind Asian tour on Sunday, signing a frenzy of trade and mineral deals with the leaders of the Southeast Asian nations and, recently, with Japan.
According to Neo Wang, China strategist at Evercore ISI, the probable outcomes of the Trump-Xi meeting are that Beijing has guaranteed access of the U.S to rare earth products under its export-control laws, buying the Boeing aircraft, consent to the sale of TikTok’s U.S. operation, and more strengthening the curbing of fentanyl flows.
Wang reported that in exchange, the U.S. might promise to ease export controls on some semiconductor equipment and AI chips, withdraw the threat of imposing a 100 percent tariff, and a 10-percentage-point cut in the fentanyl-related tariffs, beginning on November 10, as part of a new tariff truce.
Wang further added that “We expect Beijing to give Trump a way out on the fentanyl deadlock, such as via a new promise from Xi in person, to facilitate Trump’s reduction on China fentanyl tariff, effective no later than Nov. 10.”
