Calm returns: Trump lowers import tariffs after agreement with China

At the beginning of October, trade tensions between the United States and China were running high. After export restrictions on rare earth metals, Trump threatened a 100 percent import tax. These developments caused a lot of uncertainty on the financial markets. But now peace seems to have returned after a new announcement.

Trump sets new basic tax

The US government will impose a flat 10 percent import tariff on Chinese goods from November 10. This decision stems from two Executive Orders signed on November 4. The previous, increased rates are thus largely reversed. Additional duties will also be suspended for the time being, as long as China adheres to new agreements.

One of the agreements concerns tackling the dangerous drug fentanyl. China has pledged to limit the export of this drug by, among other things, tackling the export of certain chemical raw materials, the ‘precursor chemicals’. These are basic materials that can later be converted into fentanyl.

Fentanyl has become one of the largest public health crises in the United States. This extremely powerful synthetic opioid is responsible for tens of thousands of fatal overdoses each year. Most illegal fentanyl enters the country via smuggling routes and is often produced with chemical raw materials from countries such as China.

In addition, the US is putting the so-called reciprocity tariff on hold until at least November 10, 2026. During that period, a fixed import tariff of ten percent applies to Chinese products, instead of a variable levy.

China provides commitments in exchange for tariff reduction

In exchange for the tariff reductions, China itself is also making some important concessions. For example, Beijing promises to abandon planned export restrictions on rare earth metals and other critical raw materials. This concerns materials that are essential for, among other things, the production of electric vehicles, batteries and computer chips.

China also says it will refrain from taking countermeasures against American companies in the semiconductor and technology sector, such as Nvidia. The country also promises to purchase additional American agricultural products.

With the new agreements, peace seems to have returned for the time being. In October, the escalation led to enormous unrest on the financial markets and a sharp decline in many crypto coins. In one day, no less than 19 billion dollars worth of positions were liquidated, the largest single day liquidation ever on the crypto market.