Speaking to reporters aboard Air Force One on Friday, President Trump said he is prepared to eliminate all tariffs on Chinese goods tied to fentanyl production if Beijing successfully halts exports of the drug and its precursor chemicals.

“As soon as we see that, we’ll get rid of the other 10%,” Trump said, confirming that the US has already reduced fentanyl-related tariffs from 20% to 10% as part of the deal struck in Seoul.

The agreement, which follows months of trade tension and mixed signals, represents the first concrete step toward de-escalation since Trump’s return to office reignited the tariff war between the world’s two largest economies.

What’s in the Deal

According to both sides, the new arrangement includes a mix of tariff relief, resource commitments, and diplomatic coordination:

  • Fentanyl-related goods tariffs: Cut from 20% to 10%, with a full removal possible if China curbs exports.
  • Overall tariff level: US duties on Chinese goods will drop to 47% from 57%.
  • Rare earths: China will temporarily lift its export controls on critical minerals used in semiconductors and defense.
  • Energy: Beijing will resume large-scale US energy purchases, including potential deals tied to Alaskan oil and gas.
  • Agriculture: China will restart soybean imports “immediately”, according to Trump.
  • Technology: The US will mediate talks between Beijing and Nvidia CEO Jensen Huang over China’s use of restricted AI chips.

Xi’s Response: Warning Against Fragmentation

In his first comments on the deal, Xi Jinping cautioned against “breaking supply chains”, signaling Beijing’s ongoing concern about Washington’s broader industrial policy.
While China welcomed the partial rollback of tariffs, Xi stressed that economic cooperation should not be used as leverage in political disputes.

The remarks underscore the delicate balance in China’s position: a willingness to cooperate on trade, while maintaining resistance to what it sees as US overreach in tech restrictions.

Markets React Cautiously

The announcement initially lifted sentiment across Asian markets on Friday, with Chinese energy and agriculture stocks rising modestly.
However, gains were muted as traders questioned whether the truce would last — particularly given the US Senate’s new resolutions seeking to roll back Trump’s country-specific tariffs, and an upcoming Supreme Court case challenging the legality of his broader tariff regime.

Meanwhile, Nvidia (NVDA) edged higher after Trump mentioned possible talks over chip exports, while commodity futures in soybeans and LNG saw slight upticks.

Analyst Take

Market strategists view the deal as symbolic but not yet structural.
Cutting fentanyl-related tariffs carries diplomatic value, but the broader framework still leaves most of the 47% average tariffs intact.

“This is less a truce than a timeout,” said one Asia-based economist. “It shows both sides are testing a softer tone, but neither is ready to fully dismantle their tariff walls.”

What Comes Next

The Trump administration said it will monitor China’s compliance “in real time,” while Beijing’s commerce ministry is expected to issue new export guidance next week.
A follow-up meeting between Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng is reportedly planned for November to discuss enforcement details and AI-sector carve-outs.

The Trump–Xi Seoul deal may mark a turning point — but not the end — of the tariff era.
While both leaders struck a conciliatory tone, the political and legal crosscurrents surrounding Trump’s trade policy mean the détente could easily unravel if either side backtracks.

Related: What the Trump-Xi deal means for stability and markets