Trump Demands China Crack Down on Fentanyl — Tariffs to 47%, Temporary Truce on Rare Earths: The Practical Outcomes and Side Effects of the Trump-Xi Meeting

2025年11月02日 00:25

"If enforcement visibly progresses, the remaining 10% will also be removed" — following the US-China summit in Busan, President Trump mentioned the complete removal of tariffs related to "fentanyl" against China. The summit featured a package of short-term emergency measures, including a reduction of overall tariffs to 47%, a one-year freeze on rare earth regulations, and the resumption of large-scale purchases of US soybeans. Meanwhile, structural issues such as AI and semiconductors, supply chain security, and geopolitical gaps remain unaddressed.

What was decided: Key Points

Fentanyl-related tariffs: Halved from 20% to 10% . Furthermore, if progress in Chinese enforcement is visible, the remaining 10% will also be removed .
Total framework of tariffs against China: Reduced from 57% to 47% .
Rare earth export regulations: Frozen for one year . Temporarily easing the risk of supply shock.
US soybeans: Resumption of large-scale purchases for the current season and the next three years (reports suggest a scale of 25 million tons per year).
Mutual additional port-related costs: Temporarily suspended . Avoiding escalation concerning shipping, shipbuilding, and logistics.

These measures strongly suggest a **"one-year truce" . If implementation does not progress, there is a possibility of an immediate return to the "status quo ante" of tariffs and export regulations.

The Fentanyl Issue and the Effectiveness of the "Tariff Lever"

Fentanyl is a powerful synthetic opioid and a leading cause of drug overdose deaths in the US. The distribution of precursor chemicals and related materials originating from China is a major concern for the US.
Although there was a period when China strengthened some regulations in 2019, leading to a decrease in inflow, it has since resurged due to the sophistication of supply chains (via third countries and the spread of new compounds).
The Trump administration is using the economic lever of "tariffs" to encourage Chinese enforcement, but there are limits to strengthening regulations on one side only against multiple loopholes such as international mail, small cargo, and cryptocurrency payments . The key is whether both the US and China can delve into joint investigations between financial, customs, and police authorities and the designation suspension of specific companies and laboratories .

Reactions on Social Media: A "Split" Between Praise and Criticism

Supporters : "A pragmatic deal that moves rare earths and agricultural products while extracting fentanyl enforcement ," "Successfully soft-landed from the threat of 100% tariffs ," and other pragmatic evaluations are numerous. Major media X officials also reported swiftly, and watchers analyze that a major collapse within the year was avoided.
Critics
: US Senate Democratic Leader Schumer condemned on X, saying " Trump succumbed to China ." Hardliners on China claim " No structural issues have been resolved ," " It's just a one-year pause ." Think tank experts also calmly state it's a " transactional settlement rather than a structural transformation."
Chinese social media
The US conceded first
," while policy experts caution " If enforcement results are not shown, it will reverse ." Chinese media emphasized " Mutual respect agreement " and " Rare earths remain a card ."
Overall, **"No winner emerges"

Market Sentiment: No Surprise, Wait-and-See

Global stocks show

limited reaction

. As "some kind of pause" was priced in beforehand, there is little surprise.

Soybean futures
are mixed in the short term. The purchase commitment supports supply and demand, but the
caps the price upside.
Rare earth-related
sees supply concerns recede with the "freeze." However, the
is on the minds of investors, making it difficult to lead to capital investment.

What Remains as "Homework"

Verifiability (Verification) : Can enforcement KPIs (number of arrests, number of labs busted, seizure quantities, additional designation of precursors) be visualized monthly ?
Sustainability of Enforcement (Durability) : For renegotiation after the one-year limit , can automatic extension clauses or snapback (automatic tariff restoration in case of reversal) be established?
Measures Against Supply Chain "Loopholes" : Comprehensive regulatory design for third-country routes and new psychoactive substances (NPS) .
Postponement of Structural Issues
: AI and semiconductor regulations, data transfer, Taiwan and maritime security, the main issues remain unaddressed .

Analysis: This is a "Truce Agreement," Not a "Peace Treaty"

The current agreement effectively manages the upper limit of political risk (removing the "worst-case scenario" of 100% tariffs for the time being) and creates domestic achievements (headlines on soybeans, rare earths, and drug measures). However, the

strategic mutual distrust

between the US and China remains unresolved, and the economic statecraft (tariffs, export controls, investment reviews, list regulations) continues. Therefore, investors and companies should prepare for the

**"Risk of Renegotiation in One Year"** with a Plan B (diversification of procurement, review of inventory policies)

Price pass-through simulation
in case of
snapback clause
Compliance system (tracking updates on regulatory designations of precursors and chemicals) should be operational now.
Key Facts (Timeline)

October 30 (Busan)

: US and Chinese leaders held talks. Trump announced a reduction of

total tariffs from 57% to 47%

fentanyl-related tariffs from 20% to 10%
. Rare earth export regulations were frozen for one year . Agreement on large-scale purchases of US soybeans. October 31 : Trump mentioned, "
If progress in enforcement is confirmed, the remaining 10% will also be removed
Past Developments : In 2019, China strengthened some regulations, leading to a decrease in distribution. In 2023, the US and China resumed cooperation on
strengthening precursor regulations and joint investigations

Interview Notes (Editor's Note)

The fentanyl crisis requires both

treatment and prevention on the demand side (MAT and harm reduction)

and

crackdowns on the supply side

. While tariffs can serve as an "incentive for enforcement," they cannot replace drug policy . This "deal" is effective as an auxiliary line for policy tools, but the test of sustainability is yet to come.

Reference Information (Major Reports and Official Announcements)

Reference Articles

Trump Says US Would Lift China Fentanyl Tariff If Xi Cracks Down

Source: https://www.ndtvprofit.com/world/trump-says-us-would-lift-china-fentanyl-tariff-if-xi-cracks-down

Froala Editor

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