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US, China Discuss Tariff Cuts Ahead of Trump-Xi Summit, Boosting Hopes for Extended Trade Truce
Summary
- The US and China are discussing tariff cuts, raising the chances of extending their trade truce over about $30 billion in traded goods, the report said.
- The two sides are discussing tariff cuts on US energy and agricultural products, as well as Chinese raw materials and components used by US manufacturers, along with a plan to apply most-favored-nation (MFN) tariff rates to some Chinese products.
- If the two countries agree to extend the trade truce and pursue tariff cuts, that could ease the burden of US-China trade tensions on the global economy amid high oil prices and concerns over a renewed rise in inflation.
Forecast Trend Report by Period
The US and China are discussing tariff cuts on selected goods, including US energy and farm products, ahead of a leaders’ summit next week, stoking expectations that the two countries could extend their trade truce.
Bloomberg reported on Sept. 15 that Washington and Beijing are negotiating reciprocal tariff reductions on about $30 billion of traded goods based on an existing framework. The talks also include a proposal to apply most-favored-nation tariff rates to some Chinese products.
The two sides are also discussing lower tariffs on Chinese raw materials and components used by US manufacturers. A deal could be reached at a summit between President Donald Trump and Chinese President Xi Jinping scheduled for Sept. 24 in Washington.
High-level talks are set to take place before the summit. Treasury Secretary Scott Bessent said he will meet Chinese Vice Premier He Lifeng this weekend to coordinate the summit agenda, though he did not disclose the time or location.
Agriculture is set to be a key topic in the negotiations. Officials from COFCO, China’s state-owned food company, may accompany Xi on his US visit, and a delegation of chief executives from more than 10 companies is also under consideration.
Still, competition in advanced technologies including artificial intelligence, as well as China’s ties with Iran and Russia, remain complicating factors in the talks. Bessent told the House Financial Services Committee that it is important for the US to maintain its technological edge in AI competition with China.
Bessent also said sanctions related to the Iran war will be discussed in his meeting with He. As Washington steps up economic pressure on Tehran, it is treating financial ties between China and Iran as a major issue.
If the two countries agree to extend the trade truce and cut tariffs, that could ease one source of strain on the global economy as uncertainty mounts over the wars in the Middle East and Ukraine, high oil prices and renewed inflation concerns.
