Bankinter | Trade agreement reached. The United States will reduce its general tariff on China from 57% to 47% based on cutting the tariff on fentanyl precursor products from 20% to 10% in exchange for China’s efforts to curb illegal trade in this substance. China will resume soybean purchases and rare earth exports to the United States. The agreement is valid for one year, although, according to Trump, it could be extended.
Bankinter analysis team’s view: The agreement averts the threat of the United States increasing tariffs to 100% and brings the tariff on China more in line with that of other Asian countries (India 50%, Vietnam 45%, South Korea 25%). No other details have been revealed, such as the situation regarding the sale of TikTok in the United States or restrictions on China’s purchase of Nvidia chips. Although the agreement eliminates the most negative scenarios of higher tariffs or a postponement that would have prolonged the uncertainty, friction between the two countries remains latent. China will continue to seek further concessions from the United States, such as lower restrictions on technology exports and port fees for Chinese ships. Asian stock markets are trading mixed (China down 0.8%, Hong Kong at 0.0% and Korea up 0.1%).
