Trump and Xi Discuss Potential Tariff Cuts Amid Fentanyl Crisis Talks

Trump Anticipates Tariff Reduction in Fentanyl Talks with China As the world’s largest economies prepare for a crucial meeting, US President Donald Trump has indicated a potential reduction in tariffs applied to Chinese imports, stemming from discussions regarding the ongoing fentanyl crisis. This significant dialogue is set to occur in Busan, South Korea, where Trump is expected to meet with Chinese President Xi Jinping. Onboard Air Force One, Trump shared his expectations with reporters, stating, “I expect to be lowering that because I believe they’re going to help us with the fentanyl situation.” This statement comes as both nations seek to navigate their trade dynamics, with reports suggesting that the tariff on Chinese goods could be cut from 20% to as low as 10%. The timing of the Trump-Xi meeting is currently fluid, with plans for a mid-morning discussion on Thursday. The talks are anticipated to address not only the fentanyl issue but also the potential availability of Nvidia's advanced Blackwell AI chip to China, an aspect that could stir concern among US national security advocates. Trump characterized the Blackwell chip as “super duper” and noted its technological superiority over competitors. This follows Nvidia CEO Jensen Huang’s presentation of the chip to Trump in the Oval Office recently. Nvidia Shares Surge amid Anticipations of Trade Deal The recent remarks from President Trump have already had market implications, as shares of Nvidia witnessed an increase of 8.5% in Asian exchanges, hinting at further upward trajectories when US markets open. There are heightened expectations for a trade agreement that could significantly alleviate existing trading barriers between the United States and China. During a recent summit, Trump expressed optimism, noting, “The world is watching, and I think we’ll have something that’s very exciting for everybody.” The outcome of the discussions may reshape the exchange of advanced technologies between the two countries, with Huang mentioning that Nvidia has yet to seek US approval for selling the Blackwell processor in China due to local restrictions. China’s Foreign Ministry has indicated a willingness to enhance US-China relations, calling for concrete actions to improve cooperation on the fentanyl crisis while also ensuring stability in global supply chains pertaining to technology. Economic Impact and Future Considerations The prospects of halving tariffs on fentanyl-related products would lead to a significant reduction in overall tariffs, potentially making Chinese goods more competitive with imports from other countries benefiting from lower tariffs. Both US and Chinese officials recently reached an informal agreement in Malaysia, laying the groundwork for the anticipated trade discussions. In exchange for trade concessions, the US may relax certain export controls that currently hinder China's access to specific technologies. Furthermore, developments regarding TikTok’s ownership are also anticipated to be a point of negotiation, alongside logistics around Chinese soybean purchases. While discussions may touch upon various vital topics, Trump downplayed potential conversations concerning Taiwan, asserting, “I don’t know that we’ll even speak about Taiwan... There’s not that much to ask about Taiwan.” The upcoming meeting is seen as a pivotal moment in US-China relations, with both leaders aiming to forge a path towards greater collaboration amid ongoing trade tensions.