US To Roll Back Some China Tariffs If Beijing Cracks Down On Export Of Fentanyl Precursor Chemicals

The US is prepared to roll back some tariffs on China if Beijing cracks down on the export of chemicals that produce fentanyl, under a trade framework that President Trump and Chinese leader Xi Jinping are set to discuss Thursday, the WSJ reported citing people familiar. 

According to the report, China is expected to commit to more controls on the export of precursor chemicals used to make fentanyl. In return, the U.S. could cut its 20% fentanyl-related tariff on Chinese goods by as much as 10%, the people said.

If Trump lowers the fentanyl-tariff on Chinese goods to 10%, it would bring the average tariff on most Chinese imports, currently around 55%, to about 45%. That would put China’s average tariff rate closer to those of other trading partners, potentially reducing the price competitiveness of goods manufactured outside of China. Indicatively, goods from India and Brazil face 50% tariffs, and the Trump administration has said Chinese goods transshipped through Southeast Asian nations would face 40% tariffs, much higher than the 19%-20% rate for other goods from the region.

Bringing the total tariffs on China closer to the 40% levies threatened on Southeast Asian nations would reduce the incentive for Chinese firms to transship goods through those economies to the U.S., while potentially motivating more direct trade between China and the U.S.

The administration reached two trade agreements and two frameworks with Southeast Asian nations this week that included provisions to prevent China from exporting goods through their economies at below-market prices.

The U.S. and China are also expected to reduce port fees on each other’s ships, the report goes on.

Separately, China is also expected to commit to significant purchases of American soybeans, Bessent said in a CBS News interview on Sunday, potentially bringing relief to U.Sp. farmers hit hard by the loss of Chinese buyers this year.

If Beijing agrees, the framework would ease market-rattling tensions between the world’s two biggest economies. Earlier this month, China tightened controls on rare earths, a sector it dominates, potentially jolting global supply chains that rely on them to manufacture everything from electric vehicles to jet fighters. In turn Trump threatened another 100% tariffs on China. Now, under the new framework, the U.S. expects China to delay the new rare-earths rules.

“I believe that they are going to delay that for a year while they re-examine it,” Bessent said in an interview with ABC News on Sunday.

The expected deferral of China’s latest rare-earth controls means Trump’s threat to impose a 100% tariff on all Chinese goods by Nov. 1 is now “effectively off the table,” Bessent told CBS News.

There’s more: Chinese negotiators are also expecting the U.S. to freeze potential new policy actions deemed as harmful to China, such as controls on exports of products made with U.S. software. Bessent told CBS News on Sunday there have been no changes to U.S. export controls.

It is unclear how the framework would affect a different set of rare-earths restrictions that Beijing announced in April. The established licensing system suggests authorities could ramp up rare-earth restrictions again if the U.S. were to impose new trade policies deemed harmful to China.

Chinese Vice Commerce Minister Li Chenggang, a senior member of China’s trade delegation, said the two sides have reached “preliminary consensus” on issues including export controls, reciprocal tariffs, fentanyl-related tariffs, cooperation on fentanyl, an expansion of bilateral trade and port fees. Both sides will then go through domestic approval processes, he said.

“The current turbulences and twists and turns are the ones that we do not wish to see,” Li said.

Federal Bureau of Investigation Director Kash Patel is set to travel to Beijing to discuss the fentanyl issue with Chinese authorities, said people familiar with the matter.

The expected agreements are subject to change and dependent on the meeting of the two leaders. Details are expected to be hammered out in subsequent negotiations.