US and China Cut Tariffs
US and China Cut Tariffs
The United States and China have agreed to reduce tariffs on around $60 billion worth of goods, covering products ranging from US coal and agricultural goods to Chinese toys and household products.
The agreement follows a meeting between US President Donald Trump and Chinese President Xi Jinping in Washington last week.
A new framework for trade
Under the so-called “30-for-30” framework, each country will be able to import $30 billion of non-sensitive goods from the other at reduced tariff rates.
The US trade representative said the arrangement could improve market access for around 30% of US exports to China. The US administration also said it would continue pursuing agricultural and energy purchases, balanced trade in non-sensitive goods, and improved market access for US farmers, manufacturers, businesses and workers.
China’s list of US products covers 1,619 items, including corn, wheat, frozen meat, seafood, wood products, cosmetics and medical devices.
US soybeans were notably excluded. American soybean producers have been among those affected by the prolonged trade dispute, as Chinese buyers have shifted some purchases toward alternative suppliers.
China has also agreed to import at least 10 million metric tons of US coal in both 2027 and 2028. Previous purchasing commitments have not always been met in full, however, making implementation an important part of the latest agreement.
The US list covers 77 Chinese import items, including toys, tableware, kitchen accessories, curtains, electric shavers and inflatable balls.
Tariff tensions remain
The agreement comes alongside a wider pause in further tariff increases between Washington and Beijing. Under the existing arrangement, tariffs stand at 30% on Chinese goods and 10% on US goods, with the pause extended until January 10.
The two countries have extended the trade truce several times since negotiations began in Geneva in May 2025.
The products covered by the latest agreement are expected to be excluded from future tariff measures. That could give companies importing and exporting these goods greater clarity over their costs and pricing.
Tariffs have been a central part of the US effort to reduce its trade deficit with China, which measures the difference between US exports to China and imports from China.
Chinese exporters have responded by increasing shipments to other markets, including Europe. The US trade representative said the US goods trade deficit with China had fallen by around 40% since Trump took office and was on track to reach approximately $140 billion this year, compared with around $295 billion in 2024.
The agreement also covers AI
The discussions extended beyond conventional trade. The United States and China agreed to establish a bilateral communication channel for incidents involving advanced AI technology.
The two sides also agreed to use the term “super intelligence” when referring to the emerging technology and established a US-China Super Intelligence Dialogue to exchange views on its potential risks and benefits. The next exchange is expected by November 2026.
Lower tariffs could reduce costs for companies trading the affected goods and make pricing and supply decisions easier. But the agreement does not remove the wider trade tensions between the two countries.
What happens next will depend on whether the purchasing and market access commitments are fulfilled and whether both sides maintain the agreed tariff treatment.
For companies operating between the two markets, the immediate focus will be on which products receive lower tariffs, how long those rates remain in place, and whether further changes are introduced as trade negotiations continue.
