PRC–US tariff dispute remains in a truce phase, not final settlement

context: PRC and US trade teams met in South Korea on 12–13 May 2026 and reached preliminary agreement on several economic and trade issues. US President Trump’s delegation to Beijing included senior executives from major US firms in tech, finance, semiconductors, aerospace and agriculture, underlining deep bilateral commercial ties. Rising tensions, including the Iran conflict, are adding pressure to steady ties, while Washington’s new Section 301 probes and Beijing’s push for self-reliance and tighter supply chain security could keep relations under strain.

The Ministry of Commerce unpacks latest PRC–US agreements on trade negotiations

  • both sides agreed to
    • discuss reciprocal tariff cuts covering at least US$30 bn of products
      • with some potentially qualifying for most-favoured nation tariff rates or lower
    • establish intergovernmental trade councils
    • include agricultural products in reciprocal tariff reduction frameworks alongside lower non-tariff barriers and broader market access
    • reaffirm plans to extend the Kuala Lumpur arrangements suspending selected tariffs and trade countermeasures through 10 November 2026
      • including the US ‘24-percent reciprocal tariffs’, ‘50 percent penetration rules’ and Section 301 probes into the PRC maritime, logistics and shipbuilding sectors
  • the PRC said export controls on rare earths and other critical minerals are implemented under domestic laws
    • with compliant civilian licence applications subject to review
    • the PRC said it is willing to work with the US to back business ties and keep global supply chains stable
  • the PRC confirmed plans to purchase 200 Boeing aircraft under ‘commercial principles’
    • the US side will provide engine and spare parts supply guarantees
  • the US committed to removing automatic detention measures on PRC dairy and selected seafood products
    • allow trial imports of PRC bonsai plants 
      • accelerate related market access revisions
    • recognise Shandong as a high-pathogenic avian influenza-free zone
      • accelerate reviews on PRC firms from import alert watchlists
  • the PRC is to resume registration approvals for eligible US beef exporters 
    • lift restrictions on qualified poultry imports
    • accelerate reviews of US beef exporter rectification materials
    • continue exchanges on agricultural biotech issues

Tu Xinquan 屠新泉 University of International Business and Economics China WTO Institute dean shares insights on the Trump–Xi Summit 

  • Jensen Huang 黄仁勋 Nvidia founder has advocated integrating Nvidia products into the PRC’s AI ecosystem
    • the issue reflects tensions between US commercial interests and Washington hawks advocating stricter tech containment policies 
    • Jensen Huang’s late participation reflected Trump’s relatively pragmatic approach toward semiconductors
      • Trump wants US firms to sell select non-leading-edge chips to the PRC for commercial gains
  • the current tariff dispute remains in a ‘truce’ phase rather than a final settlement
    • stabilising tariff expectations for the next two to three years is seen as a major potential breakthrough 
      • US tariff policy remains uncertain following a US Supreme Court ruling that previous Trump IEEPA tariffs were unlawful
        • while Washington advances new Section 301 investigations targeting the PRC
  • rising oil prices due to the Iran conflict are increasing inflationary pressure in the US economy
    • weakening Trump’s bargaining leverage
      • while strengthening Beijing’s negotiating position
  • the PRC is likely to make market purchase commitments based on domestic demand 
    • with US agricultural products and Boeing aircraft remaining essential imports 
    • export controls involve core national security interests on both sides
      • making substantive near-term breakthroughs unlikely