Trump shaves China tariffs after 'amazing' Xi meeting

By Trevor Hunnicutt

BUSAN, South Korea (Reuters) -U.S. President Donald Trump said on Thursday he had agreed with President Xi Jinping to trim tariffs on China in exchange for Beijing cracking down on the illicit fentanyl trade, resuming U.S. soybean purchases and keeping rare earths exports flowing.

Trump's face-to-face talks with Xi in the South Korean city of Busan, their first since 2019, marked the finale of the U.S. president's whirlwind Asia trip on which he also touted trade breakthroughs with South Korea, Japan and Southeast Asian nations.

"I thought it was an amazing meeting," Trump told reporters aboard Air Force One shortly after he departed Busan, ranking the talks a "12 out of 10".

Trump said tariffs imposed on Chinese imports would be cut to 47% from 57% by halving the rate of tariffs related to trade in fentanyl precursor drugs to 10% from 20%.

Xi will work "very hard to stop the flow" of fentanyl, a deadly synthetic opioid that is the leading cause of American overdose deaths, Trump said. The tariff was reduced "because I believe they are really taking strong action," he added.

Trading in global stocks was choppy as Trump revealed details of the deal, with major Asian indexes and European futures swinging between gains and losses. China's Shanghai Composite Index slipped from a 10-year high, while U.S. soybean futures were weaker.

"At the moment, the price action makes things seem like a lot of this was already priced in," said Kyle Rodda, senior market analyst at Capital.com in Melbourne. "Arguably the markets were hoping for the complete removal of the fentanyl tariff, so that could explain the ambivalence in the markets."

Only India and Brazil are still subject to higher tariff rates among major U.S. trading partners.

World stock markets from Wall Street to Tokyo had hit record highs leading up to the meeting on hopes of a breakthrough in a trade war between the world's two largest economies that has upended supply chains and rocked global business confidence.

The cordial meeting, which took place on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit, lasted nearly two hours.

Trump repeatedly talked up the prospect of reaching agreement with Xi since U.S. negotiators on Sunday said they had agreed a framework with China that will avoid 100% U.S. tariffs on Chinese goods and achieve a deferral of China's export curbs on rare earths, a sector it dominates.

But with both countries increasingly willing to play hardball over areas of economic and geopolitical competition, many questions remain about how long any trade detente may last.