Trump and Xi Consider Reducing Tariffs on $30B Imports in Trade Talks

• U.S.-China two-way goods trade fell 29% to $415 billion in 2025 from $582 billion in 2024, with the U.S. trade deficit dropping 32% to $202 billion, its lowest in two decades
• Potential tariff reductions focus on energy and agriculture, including China's retaliatory duties of 10% on U.S. crude oil, 15% on LNG, and up to 55% on beef
• U.S. lawmakers and industry groups have warned against any 'Board of Investment' agreement that would allow Chinese investment in the U.S. vehicle sector, citing concerns about hollowing out domestic manufacturing

Summary

Key Development: The U.S. and China are negotiating a "Board of Trade" mechanism that could reduce tariffs on approximately $30 billion worth of non-sensitive goods from each side. The framework represents a significant policy shift ahead of meetings between President Trump and President Xi Jinping in Beijing.

Strategic Shift: Unlike previous negotiations, Washington is abandoning demands for China to reform its state-directed economic model. Instead, the focus is on numerical trade targets in non-strategic sectors while maintaining tariffs and export controls on national security-sensitive technologies. U.S. Trade Representative Jamieson Greer describes the approach as creating an "adapter" between incompatible economic systems.

Trade Context: U.S.-China bilateral trade has declined sharply, falling 29% to $415 billion in 2025 from $582 billion in 2024. The U.S. trade deficit dropped nearly 32% to $202 billion, the lowest in two decades.

Potential Tariff Reductions:

• China maintains a 10% general tariff on all U.S. imports, plus retaliatory duties: 10% on crude oil, 15% on LNG and coal, and up to 55% on beef
• The U.S. could reduce 7.5% tariffs on Chinese electronics, footwear, and home goods imposed in 2019
• Energy and agricultural products are primary focus areas for increased U.S. exports

Investment Concerns: A proposed "Board of Investment" may also be discussed, though it remains less developed. U.S. lawmakers and industry groups have warned against opening the vehicle sector to Chinese investment, citing risks to domestic manufacturing.

Timeline: The 10% temporary global U.S. tariff is set to expire in July.