President Trump lowers fentanyl tariffs on China to 10% as Beijing delays rare earth regulations

President Donald Trump and Chinese President Xi Jinping emerged after a high-stakes meeting touting an agreement on tariffs and export controls that amounted to a visible detente in the contentious trade war between the two superpowers.

However, many details about what was accomplished remain unclear, while other key issues in the US-China trade relationship do not seem to have surfaced at all. Meanwhile, overall U.S. tariffs on Chinese imports will remain at historically high levels.

The agreement struck during the talks in Busan, South Korea, does not amount to a comprehensive trade deal, but President Trump insisted after the meeting that he was ready to sign it “soon.”

Still, he praised the summit meeting with Xi as “excellent,” giving it a score of 12 out of 10.

It was the first face-to-face meeting between the two leaders in six years. They spoke for an hour and 40 minutes.

Key achievements include the U.S. agreement to immediately reduce fentanyl-related tariffs on China from 20% to 10%.

Trump told reporters on Air Force One after the meeting that he believed Xi would “work hard to stem the flow” of the addictive opioid fentanyl and its precursor chemicals into the United States. China has repeatedly promised to reduce fentanyl trafficking to the United States, but experts have accused it of failing to deliver on those promises.

President Trump did not provide further details. “The two sides reached an agreement on issues such as cooperation in fentanyl management,” a Chinese Commerce Ministry spokesperson said in a translated statement, without elaborating.

President Trump said overall tariffs on Chinese goods would be reduced from 57% to 47%.

Han Sheng Lin, China director at advisory firm Asia Group, said the tariff cuts address “China’s serious grievances” and signal that “China’s efforts to curb exports of fentanyl precursors, long disapproved by the U.S. government, are finally being recognized.”

President Trump and the Chinese government also confirmed that they have agreed to suspend China’s recently announced export restrictions on valuable rare earth minerals for one year.

The regulations were announced on Oct. 9, infuriating President Trump, who threatened to raise tariffs on China by 100% starting Saturday.

President Trump confirmed on Air Force One that the United States would end its tariff threat. He added that he believed the one-year suspension of China’s export restrictions “will be extended periodically.”

However, a statement from China’s Ministry of Commerce only said that the Chinese government would suspend the measures for one year and then “consider and revise a concrete plan.”

China also did not mention other export control measures it imposed earlier this year and are still in place.

Chinese companies control much of the global supply chain for rare earths, which are essential to the production of products ranging from semiconductors to missiles. The Chinese government has tightened export controls on critical minerals over the past two years, with a particular focus on restricting their use by other countries for military purposes.

“China’s influence in the processing of rare earths and critical minerals will continue to surface intermittently, effectively dampening the rise in bilateral tensions,” Louise Lu, head of Asian economics at Oxford Economics, said in a note on Thursday.

Trump also said that “vast amounts” of U.S. soybeans and other agricultural products would be shipped “immediately” by China.

China is the largest buyer of U.S. soybeans. Earlier this year, it halted all purchases of staple crops for months amid a tit-for-tat tariff battle that cost U.S. farmers billions of dollars in lost income.

Ahead of the Trump-Xi summit, Chinese-owned COFCO bought three cargoes of U.S. soybeans for shipment in December and January, representing about 180,000 tonnes of product, which experts say is only a fraction of what it bought a year ago during the fall harvest season. By comparison, China purchased about 6 million tons of U.S. soybeans in October 2024, according to USDA data. In all of 2024, China purchased about 27 million tons.

The statement from China’s Ministry of Commerce did not specifically mention soybeans, but said the two sides had reached an agreement to “expand trade in agricultural products.”

After the meeting, the Chinese government announced that the U.S. tariff investigation into China’s shipping and shipbuilding industries and Beijing’s countermeasures would also be postponed for one year.

President Trump said he would visit China in April and that President Xi would then visit the United States, but the Chinese side did not provide a schedule.

President Trump said several important issues were not addressed during the meeting.

About sales of NvidiaTrump said the two countries talked about “a lot of chips” going to China, but not the cutting-edge Blackwell chips. “They’re going to talk to Nvidia and others about taking back the chips,” he said.

President Trump said Taiwan was not part of the discussion.

The two leaders also avoided the topic of China’s purchases of Russian oil, a financial lifeline for the Kremlin as it continues its war in Ukraine.

“Ukraine was very vocal, but we didn’t really discuss oil,” Trump said.

Trump also did not hint at a deal he had struck with Xi to keep the popular social media app TikTok from going dark in the United States.

The Chinese government said it would “cooperate with the United States to appropriately resolve issues related to TikTok.”

Global stocks fell and gold prices rose 1.2% as investors assessed the impact of a trade truce after months of economic conflict.

While the trade ceasefire is “welcome news,” there is no sign that it will address fundamental structural concerns such as China’s industrial overcapacity and non-market economic practices, said Wendy Cutler, senior vice president at the Asia Society Policy Institute.

That means the ceasefire is “fragile and tensions are certain to rise again,” Cutler added.

Before the meeting, the two leaders struck a conciliatory tone, with Trump calling Xi an “old friend” with whom he had a “very good relationship” and Xi stressing that China’s economic growth ambitions would not undermine Trump’s vision of “making America great again.”

Tensions between the world’s two economic powers have boiled over this year. The latest escalation occurred this month, with the Chinese government’s export restrictions and the US government’s threat to ban software exports to China.

The United States has been sharing details in recent days of deals it hopes to reach with China, ranging from limiting the flow of fentanyl into the United States to selling TikTok from its Beijing-based parent company ByteDance. Tariffs, technical regulations, and rare earths were also on the table for discussion.

Prior to the meeting, Mr. Xi shook President Trump’s hand during a photo shoot at Gimhae Air Base in Busan, and in his opening remarks appealed for the United States and China to become “friends and partners.”

The Chinese leader, sitting across the table from Trump, said he was “very happy” to be meeting with the US president for the sixth time, adding that it was “normal” for the two economic giants to have “sometimes friction”.

“China’s development is closely related to your vision of making America great again,” Xi said, according to a statement from China’s Ministry of Foreign Affairs.

Yue Su, chief economist at the Economist Intelligence Unit, said the conciliatory tone marked a marked change from Xi’s talks with former US President Joe Biden late last year, in which he further emphasized the “inevitable competition” between the two countries.

Although the deal still lacks “solid structural foundations” and could be easily overturned, the two countries are likely to stick to it in the short term to demonstrate friendly relations, Su added.

—CNBC’s Sam Meredith contributed to this report.