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President Donald Trump announced a major agreement with Chinese leader Xi Jinping, agreeing to cut US tariffs on Chinese imports by 10%.
This concession lowers the minimum tariff rate to 20% in exchange for China’s promise to increase its crackdown on fentanyl and its chemical precursors.
The Deal and Its Risks
The tariff reduction is expected to offer some relief to American consumers and restore stability in trade between the world’s two largest economies.
However, the move is viewed as a significant risk for the Trump administration, which critics argue has been consistently outmanoeuvred by Xi Jinping in the ongoing trade war.
The trade war’s initial goals included reducing fentanyl flow, bringing manufacturing back to the US, restoring the trade balance, and resolving the fate of TikTok’s US assets.
While there has been progress—including a shrinking trade gap and preliminary steps toward a TikTok framework—China has previously slow-walked promises, particularly regarding the export of rare-earth minerals.
Why Trump Made the Move
Despite past frustrations, the US has acknowledged that China has taken tangible steps to restrict fentanyl precursor chemicals, citing evidence of declining fentanyl purity and reduced border seizures in the US.
This progress appears to be the primary motivation for Trump to make this tariff-cutting concession now, providing him with a win on a key domestic issue.
By reducing tariffs, Trump also addresses the leverage China holds over the US, which has included targeting American farmers (a key voting bloc) by refusing to buy soybeans and creating rare-earth shortages.
Consequences for Allies
A potential side effect of the deal is the strain on relationships with US allies, Mexico and Canada. Both countries have also been targeted by Trump’s fentanyl tariffs despite making efforts to limit drug trafficking.
The deal improves relations with the US’s chief economic rival while potentially angering its largest trading partners.
