On Oct. 30, President Donald Trump and Chinese President Xi Jinping held a long-awaited meeting in Busan, South Korea. In a social media post, President Trump said the leaders “had a truly great meeting” and “agreed on many things, with others, even of high importance, being very close to resolved.” The Chinese Ministry of Commerce (MOFCOM) similarly confirmed in a Q&A that “China and the United States reached a joint arrangement … and agreed to strengthen cooperation in economic and trade fields.”
One critical element of the joint arrangement appears to be a Chinese agreement to suspend its enhanced export controls on critical minerals for a year. In return, the United States has agreed in concept to suspend the 50% “Affiliates” rule for a year. The rule was set to extend U.S. export control licensing requirements to companies that are majority owned by parties on the U.S. Entity List, Military End-User List or a subset of the list of Specially Designated Nationals.
The table below outlines the respective commitments made by both nations based on President Trump’s social media post and his comments to reporters, as well as the Chinese MOFCOM Q&A.
*Denotes a commitment that is yet to be confirmed by the corresponding nation.
Impact on Tariff Rates
As of this writing, neither the United States nor China has taken formal action to implement these commitments. Treasury Secretary Scott Bessent indicated that he “expects [the leaders] will exchange signatures, possibly, as soon as next week.” Once the Trump administration takes action to lower the trafficking tariff to 10%, many Chinese goods will be subject to a 45% tariff above preexisting “Most Favored Nation” rates. The 45% figure combines the 10% baseline tariff, the remaining 10% fentanyl tariff, as well as a tariff of up to 25% levied under Section 301 of the Trade Act of 1974 during the first Trump administration.
President Trump has described tariffs on China as falling from 57% to 47%, a figure that appears to reflect a calculation of the average tariff rate imposed on Chinese imports.
China also remains subject to product-specific tariffs levied under Section 232 of the Trade Expansion Act of 1962, as well as certain Antidumping and Countervailing Duties (AD/CVD). Determining the duty due on any specific import requires the importer to consider the specific duties that apply to the item in question.
Although the president has committed to lowering the trafficking tariff on Chinese goods, there remains potential for future tariff increases. On Oct. 24, United States Trade Representative (USTR) Jamieson Greer announced the initiation of a Section 301 investigation of China’s implementation of the Economic and Trade Agreement Between the Government of the United States of America and the Government of the People’s Republic of China (“Phase One Agreement”). He has since made clear that this investigation will move forward, despite the progress made in the Trump-Xi meeting.
If USTR determines that China failed to uphold its commitments under the Phase One Agreement, Section 301 requires the imposition of mandatory U.S. trade restrictions, including by way of tariffs. Furthermore, if the Supreme Court ultimately rules against the second Trump administration’s use of the International Emergency Economic Powers Act (IEEPA), the Section 301 investigation could form a separate basis to reimpose tariffs at similar levels.
An Informal “Truce”
While Secretary Bessent’s comments suggest the two sides could take steps to formalize the understanding in the coming weeks, at this point the framework comes as an informal political agreement, not a formal trade deal. The Trump administration has yet to release a fact sheet or other formal statement, while the Chinese MOFCOM Q&A appears to reference only a consensus on expanding agricultural trade rather than specific purchase commitments. It also appears to suggest the United States has committed to suspending additional tariffs, not mentioned by the Trump administration.
Ultimately, the impact of this informal framework will depend on the extent to which each government believes the other is upholding its commitments. The agreement can be described as a “truce” that does not fully resolve any issue between the two countries. However, Chinese confirmation of President Trump’s plan to visit China early next year creates the potential for a period of relative stability between the two geopolitical rivals. Secretary Bessent has suggested that the framework will hold over the next year, at which time the nations will return to the negotiating table.
