Washington and Beijing shift toward a practical trade framework focusing on USD 30 billion in tariff cuts for non-sensitive goods, abandoning previous demands for China to overhaul its economic system as bilateral trade tensions ease.
The US and China are moving toward a new approach in their trade relationship, with both nations expected to identify approximately USD 30 billion worth of goods for potential tariff reductions.
A new pragmatic strategy
US Trade Representative Jamieson Greer introduced the Board of Trade concept in March as a central component of discussions for the high-level summit between President Donald Trump and Chinese President Xi Jinping. Unlike past negotiations, Washington has abandoned efforts to transform Beijing’s state-directed economic model into a market-oriented system resembling America’s consumer-driven approach.
Greer explained that the administration recognises China’s governance and economic management as inherent to their system. The focus now centres on optimising trade in non-strategic sectors to achieve a better balance while maintaining tariffs and export controls on national security-sensitive technologies. He compared the mechanism to an adapter connecting two incompatible economic systems.
Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng held preliminary discussions for three hours in Incheon, South Korea, though neither side released statements about their meeting. Former USTR negotiator Wendy Cutler, now leading the Asia Society Policy Centre, noted that both countries are converging around a USD 30 billion to USD 50 billion basket of goods for reduced barriers, though this represents only a small fraction of overall bilateral trade.
Trade landscape and potential targets
Two-way goods trade between the nations fell 29% to USD 415 billion in 2024 from USD 582 billion, while the US trade deficit dropped nearly 32% to USD 202 billion in 2025, reaching its lowest point in two decades according to Census Bureau data.
Energy and agricultural products appear likely targets for tariff relief. China currently maintains a general 10% extra tariff on all US imports, matching America’s temporary 10% tariff on Chinese goods. Beijing also imposes retaliatory duties, including 10% on crude oil, 15% on liquefied natural gas and coal, and up to 55% on beef.
The US maintains 7.5% tariffs on various Chinese consumer products since 2019, including electronics, textiles, and footwear. The temporary 10% global tariff, expiring in July, compounds these duties. Washington could potentially restore some of the 2,200 product-specific exclusions granted during Trump’s first term. In November 2025, Trump extended temporary exclusions for one year, covering solar manufacturing equipment and 164 industrial and medical product categories.
While discussions may touch on a Board of Investment concept, Greer indicated the relationship has not progressed sufficiently for major investment programmes. US lawmakers and industry groups have cautioned against agreements allowing Chinese investment in American manufacturing, particularly in the automotive sector, warning such moves could undermine domestic production capabilities.
