• Treasury Secretary Scott Bessent met with Chinese Vice Premier He Lifeng to discuss tariffs, but no final agreement was reached.
  • The talks aim to operationalize a 'Board of Trade' for targeted tariff cuts on non-sensitive goods ahead of a Trump-Xi summit.
  • The current trade truce expires on November 10, adding urgency to negotiations.

Cautious Optimism

Treasury Secretary Scott Bessent said he discussed tariffs with Chinese Vice Premier He Lifeng in New York on September 20, describing the talks as "very successful," but neither side announced a finalized tariff schedule or product list. The meeting, which also included U.S. Trade Representative Jamieson Greer, was intended to prepare for President Donald Trump's meeting with Chinese President Xi Jinping scheduled for September 24 in Washington.

The discussions center on making operational a "Board of Trade," an arrangement agreed in May to identify products eligible for lower duties. According to U.S. officials, the likely universe of goods is relatively small and deliberately non-strategic. Possible Chinese exports include consumer and other low-technology goods, while possible U.S. exports include energy, agriculture, and potentially medical devices. These categories could reduce costs for U.S. manufacturers and widen market access for U.S. exporters, but remain subject to negotiation.

Deadline Pressure

The talks are occurring against a November 10 deadline for the current truce, which had capped tariffs imposed during Trump's second term at roughly 20 percent on Chinese goods after a prior tit-for-tat escalation into triple-digit tariff rates. Without an extension, tariffs could snap back to higher levels, disrupting supply chains and raising costs for businesses and consumers.

"What institutional investors like us are really focused on is regulatory stability," Bessent said at a recent conference, though he did not directly comment on the tariff talks. "Italy in this regard has been on a very steady growth trajectory"—a remark that underscored the broader need for predictable trade rules.

Unresolved Issues

Critical minerals remain a particularly consequential sticking point. U.S. officials say Chinese flows of rare-earth magnets and other critical minerals have remained insufficient despite earlier commitments; these materials are vital for technology, defense, electric vehicles, and industrial equipment. China previously pledged additional U.S. agricultural purchases and at least 200 Boeing (BA) aircraft, though details of those transactions have not yet emerged, according to Reuters.

The negotiations are part of a wider, managed competition between Washington and Beijing—not merely a commercial tariff dispute. The U.S. position emphasizes "balanced trade" and monitoring China's compliance with earlier commitments, while China has objected to U.S. trade restrictions. Separately, Washington has restored a 12.5 percent tariff on Chinese goods tied to forced-labor allegations and is pursuing an investigation into alleged Chinese excess industrial capacity, constraining the scope for a broad détente.

Export controls on advanced AI chips and semiconductor-manufacturing equipment remain a core strategic dispute, even as the two sides discuss a notification arrangement for AI-related incidents reaching a national-security threshold. China acknowledged AI talks but did not publicly endorse the mechanism.

Market Implications

The direct economic issue is the cost and reliability of cross-border trade between the world's two largest economies. If targeted cuts proceed, U.S. manufacturers could see cheaper imported Chinese components, easing input costs and improving margins. U.S. farmers and energy exporters could benefit from lower Chinese tariffs or purchase commitments. However, benefits would probably be narrow at first because officials are discussing a limited subset of goods, not broad tariff removal.

Analysts cited by Reuters view the process primarily as relationship management. Wendy Cutler, policy director at the Asia Society, said expectations for a major deal are low and characterized the talks as an effort to keep tensions from flaring while ensuring the existing truce is honored. That assessment suggests a durable, limited détente is more likely than a resolution of the underlying economic-security conflict.

What to Watch

The principal test is whether Trump and Xi announce an extension of the tariff truce, a process for reciprocal tariff cuts, or product-specific measures after their Washington summit. A modest package involving American agriculture and energy plus selected Chinese non-sensitive manufacturing inputs is more plausible than a comprehensive tariff rollback. Negotiators will also need to show progress on rare-earth supply reliability and Chinese agricultural purchases. Meanwhile, debate over Chinese investment in the U.S. continues: the administration has shown openness to Chinese automakers building U.S. factories, while U.S. auto-industry groups have urged it to preserve an effective prohibition on Chinese vehicle sales on national-security grounds.

Correction: An earlier version of this article misstated the date of the Trump-Xi summit. It is scheduled for September 24 in Washington.