U.S. and China Announce Tariff Cuts on $30 Billion of Products Following Trump-Xi Meeting

HONG KONG (AP) — The United States and China on Monday released reciprocal lists of nonsensitive products worth about $30 billion each that will see tariff cuts, including American hair products and Chinese toys, in a deal expected to bolster bilateral trade. The details were announced days after Chinese President Xi Jinping met with U.S. President Donald Trump in Washington during his first state visit to the U.S. since 2015. The U.S. had previously reduced tariffs against China after Trump's tariffs reached as high as 145% last year, as tensions between the two countries eased. China's commerce ministry stated that the agreement will help strengthen trade cooperation. The lists included 1,619 items of U.S. goods entering China, such as agricultural commodities, hair and personal care products, timber, and medical equipment. Coal from the U.S. will also be included. For Chinese goods exported to the U.S., 77 categories were covered, including fireworks, tableware, toys, glass and wooden Christmas ornaments, and soccer balls. Tariff rates on over 90% of the products will be subject to "most-favored-nation" levels, according to the Chinese commerce ministry, meaning that country-specific tariffs will effectively be eliminated. Most-favored-nation rates are the standard tariffs applied under World Trade Organization rules, but they can differ from item to item and are often in the single digits. U.S. Trade Representative Jamieson Greer stated that the product lists focused on "nonsensitive goods on each side that could benefit from more favorable tariff treatment." The deal could help secure market access for U.S. farmers, manufacturers, businesses, and workers, while benefiting American consumers with imports from China, including household goods and toys, Greer said. Both countries agreed that the list may be adjusted later as needed, but amendments are likely to occur no more than annually. The Chinese commerce ministry mentioned that the two countries agreed to further cooperate in the agricultural sector, forming a group under the Board of Trade established in May to optimize bilateral trade. Sectors of strategic importance for both countries, such as chips, electric vehicles, and batteries, were not included in the agreement. Lynn Song, chief economist for Greater China at ING Bank, noted that this is a positive outcome for the affected products compared to a smaller tariff cut, which could lead to a more significant boost to bilateral trade. The lowered tariffs could benefit U.S. consumer brands, according to Jacob Cooke, CEO of WPIC Marketing + Technologies based in Beijing, as some products covered by China's list of U.S. imports included fast-growing categories like hair care, personal care products, and infant formula. With the U.S. list for Chinese products focused more on consumer goods, it could help lower U.S. inflation while allowing Chinese firms to export more of their overcapacity, said Gary Ng, a senior economist at French bank Natixis. However, some experts believe the economic impact at $30 billion each way may be limited overall. U.S. exports to China were approximately $68 billion through the first seven months of this year, while Chinese exports to the U.S. were around $270 billion for the first eight months, according to Prashant Bhayani, chief investment officer for Asia at BNP Paribas Wealth Management. A $30 billion deal each way will be "more meaningful" for U.S. exports to China in terms of percentage share, he stated. Even after the deal, the overall average U.S. tariff rate on China is estimated to drop from around 22% to roughly 20.5% and remain significantly higher than the approximately 11% before Trump's return to the White House early last year, according to Leah Fahy, a senior China economist at Capital Economics in a research report. Notably, U.S. soybeans were not included in the list of agricultural commodities. While the deal did not cover sensitive strategic goods, some analysts believe U.S.-China trade will likely continue to recover for the rest of the year after steep U.S. tariffs on Chinese products last year impacted bilateral trade. The U.S. and China also reached a two-month extension of the broader trade truce that was set to expire on November 10 to January. China's trade surplus, which reached a record $1.2 trillion last year, is expected to remain elevated. By August, it stood at about $800 billion, indicating that this year's surplus is "on pace to exceed the 2025 record," according to Ecaterina Bigos, a senior market strategist with BNP Paribas Asset Management. The U.S. is also investigating China among 16 trading partners in its Section 301 probe on excess industrial capacity and may impose additional tariffs on China when the investigation concludes. However, with more meetings scheduled between Trump and Xi, including at the Asia-Pacific Economic Cooperation summit in Shenzhen in November and at the Group of 20 summit in Florida in December, Song at ING stated that he would not expect a major flare-up of trade tensions before year-end. Some Chinese exporters welcomed the tariff deal announcements. Richard Chan of Golden Arts Gifts & Decor, which manufactures Christmas decorations in southern China and supplies to countries including the U.S., said, "This is positive news. The economy in both the U.S. and China is not really good, and the two sides should help each other more." However, since most of this year's Christmas goods are already being shipped ahead of the peak holiday season, the tariff reductions may have limited effect for them at least for now.