Trump’s fentanyl deal could hand China a tariff break; how big could it be?

In a possible easing of trade tensions ahead of his meeting with Chinese President Xi Jinping, US President Donald Trump said Wednesday he plans to cut tariffs imposed on China over the export of chemicals used to make fentanyl.

Speaking aboard Air Force One as he arrived in South Korea for the Asia-Pacific Economic Cooperation summit, Trump said he would reduce the 20% levy he imposed earlier in his term to pressure Beijing over the flow of precursor chemicals used in the deadly synthetic opioid.

“I expect to be lowering that because I believe they can help us with the fentanyl situation,” Trump told reporters. “We have to get rid of it.”

The move comes as Washington and Beijing prepare to finalise a tentative trade agreement reached in talks last weekend.

How much could the US lower tariffs on Chinese goods?

Under the deal, China is expected to commit to tighter controls on the export of so-called precursor chemicals used to manufacture fentanyl, which has fueled an opioid crisis that has claimed hundreds of thousands of American lives.

In return, the US could reduce the fentanyl-related tariff on Chinese goods by as much as 10 percentage points, The Wall Street Journal reported. That would bring the average tariff on Chinese imports down from about 55% to roughly 45%, narrowing the gap between China’s rate and that of other trading partners.

Trump has repeatedly accused China of enabling the global fentanyl trade by subsidising exports and failing to regulate its vast chemical industry.

“For too long, the PRC has enabled illicit fentanyl production in Mexico and elsewhere by subsidising the export of the precursor chemicals needed to produce these deadly drugs and failing to prevent Chinese companies from selling these precursors to known criminal cartels,” Trump said in a determination submitted to Congress last month.

What happens next

US and Chinese officials concluded several rounds of talks over the weekend that produced a draft understanding for the two leaders to endorse when they meet in Gyeongju on Thursday.

Speaking to business leaders attending the APEC forum after his arrival, Trump expressed optimism about the upcoming talks with Xi.

“We’re going to have a deal,” he said. “I think it’ll be a good deal for both, and that’s really a great result. That’s better than fighting.”