U.S. President Donald Trump on the 4th (local time) signed an executive order lowering the "fentanyl tariff" imposed on Chinese products by 10 percentage points (P). It is a follow-up measure to the U.S.-China summit held in Busan at the end of last month. With the two countries agreeing to a cease-fire in their tariff war, their frozen trade ties have some breathing room for now.
According to the White House and AFP, Trump formalized an executive order to cut China-related fentanyl tariffs. The key is a measure to lower the additional tariff applied to Chinese products from 20% to 10% starting on the 10th. According to the executive order released by the White House on the 4th, this measure takes effect on the 10th (local time).
Trump, immediately after returning to power in January this year, imposed what is colloquially called a "fentanyl tariff" as punishment, saying "China is not cooperating in stopping the precursors of the opioid fentanyl from flowing into the United States." U.S.-China relations between the world's two largest economies then froze rapidly. Early this year, tensions peaked as the two sides exchanged retaliatory tariffs exceeding 100%.
The conflict reached a turning point with the U.S.-China summit held in Busan at the end of last month. At the meeting, Trump and Chinese President Xi Jinping agreed not to impose any additional high tariffs on each other until Nov. 10 next year.
In addition to lowering tariffs, the United States will extend until Nov. 10, 2026 the expiration date for certain tariffs imposed under Section 301. Section 301 is a provision of U.S. trade law that allows tariffs to be imposed on countries engaging in unfair trade practices.
It will also defer for one year the enforcement of a rule sanctioning even subsidiaries on a specific list, and postpone for one year the Section 301 measures targeting China's shipping, logistics, and shipbuilding sectors.
China will halt shipments to North America of certain precursors used to make fentanyl and strictly control the export of other chemicals.
It will also effectively roll back controls on key rare earth minerals that sparked controversy over the "weaponization of resources." China will halt worldwide the new export controls on rare earths and related minerals announced on Oct. 9. For rare earths, gallium, germanium, antimony, and graphite, it plans to issue a general license so that ordinary U.S. corporations can use them. The White House assessed that it "effectively removed the rare earth controls that began after 2023."
It will also reemerge as a major player in the market for U.S. agricultural products. China will purchase 12 million metric tons (MMT) of U.S. soybeans during the remainder of this year, and from next year through 2028 will buy at least an additional 25 million MMT annually for three years. It will also suspend all retaliatory tariffs imposed on a wide range of U.S. agricultural products, including chicken, wheat, corn, cotton, pork, and beef.
Citing experts, AFP said the agreement is "the crux achieved after the first in-person meeting between the two leaders in years," and "extended the fragile US-China truce."