China, U.S. Discuss Tariff Cuts on $30 Billion of Goods
China and the U.S. are moving toward a deal to lower import taxes on $30 billion of goods each, a step that could ease pressure on global trade as President Donald Trump and Chinese leader Xi Jinping prepare to meet in Washington later this month.
The prospect of reciprocal tariff cuts matters because it would mark the clearest thaw in the trade fight since the two sides imposed punishing duties on each other’s imports. It also gives markets a fresh reason to price in a narrower, targeted reset rather than a sweeping agreement, even as the broader tariff truce remains set to expire on Nov. 10.
Commerce Ministry spokesperson Huang Ling said negotiators are trying to put the reductions in place “at an early date,” while Xinhua said the $30 billion figure applies to each side. The planned cuts are being discussed as part of talks to create a U.S.-China Board of Trade, a follow-on to the tariff truce reached earlier this year after Trump lifted duties on Chinese goods to extreme levels and Beijing retaliated.
The economics are straightforward: lower import taxes would reduce costs for some manufacturers, retailers and consumers, while easing some of the margin pressure that has hung over supply chains since 2025. But the scope is limited, and that is why the move would probably help the U.S. more than China, said Gary Ng, senior economist at Natixis, because $30 billion is about 28% of U.S. exports to China versus roughly 10% the other way around.
For investors, the headline keeps trade risk front and center but also removes some of the downside tail risk ahead of the Sept. 24 summit. That is why China proxies such as the iShares China Large-Cap ETF, FXI, and the KraneShares CSI China Internet ETF, KWEB, are likely to stay sensitive to any sign that leaders turn the dialogue into a concrete tariff rollback, while the broader S&P 500, tracked by SPY, is watching for spillover into industrials, semiconductors and consumer names exposed to China demand.
Barclays said in a note this week that trade will be “front and center” at the summit, but that the chances of a broad deal look limited and targeted tariff reductions are more likely. That matches the market’s current read: geopolitical sentiment on U.S.-China relations has improved sharply, but the underlying relationship remains fragile, with the tariff truce still time-limited and the Board of Trade only in its early stages.
The next catalyst is the Trump-Xi meeting in Washington, where investors will look for confirmation of tariff cuts, details on which goods are covered and whether both sides can extend the truce past November. A failure to deliver would quickly revive concern about supply chains, export demand and the durability of the recent thaw.
| Entity | Gains | Losses |
|---|---|---|
| U.S. exporters | ▲Lower tariffs, better access | ▼Less protected domestic pricing |
| Chinese exporters | ▲Some tariff relief | ▼Smaller U.S. market leverage |
| FXI / KWEB longs | ▲Trade-deal upside | ▼Delay in tariff cuts |
| U.S. importers and consumers | ▲Lower landed costs | ▼Less urgency for price resets |