U.S.–China Trade Rebalancing: Key Takeaways from the New Agreement

This week, U.S. President Donald Trump and Chinese President Xi Jinping announced a sweeping economic agreement following high-level talks in Seoul. The deal marks a new phase in the evolving U.S.–China trade relationship. It represents both a temporary easing of certain tariffs and export restrictions, and a recalibration of long-term strategic goals between the world’s two largest economies.

A Balancing Act Between Security and Trade

The agreement builds upon multiple fronts: curbing fentanyl precursor exports, reopening agricultural markets, and stabilizing industrial supply chains for critical minerals and semiconductors.

Notably, China has agreed to suspend or roll back several major retaliatory measures. These include the suspension of tariffs imposed on U.S. farm exports—soybeans, pork, beef, and sorghum among them—and the lifting of restrictions on key American firms previously targeted under China’s “unreliable entity” framework. Chinese regulators will also terminate ongoing investigations into U.S. semiconductor and technology companies, while committing to resume trade in hardwood logs and other key commodities.

At the same time, China has pledged to suspend the expansive export controls announced earlier this year, which affected rare earth elements, gallium, germanium, and graphite. Under the new arrangement, these materials will now be licensed for export under a general authorization, easing supply chain concerns for U.S. manufacturers.

U.S. Commitments: Tariff Adjustments and Policy Delays

In exchange, the United States will roll back the “fentanyl tariffs” by 10 percentage points and suspend the next phase of reciprocal tariffs for one year—until November 2026.

The administration has also announced the temporary suspension of two key regulatory initiatives:

• The Affiliates Rule under the Export Administration Regulations (which would have extended export controls to entities majority-owned by listed parties); and
  
• The Section 301 actions targeting China’s shipbuilding, logistics, and maritime sectors.

Both suspensions are set for one year, allowing negotiators time to work toward a longer-term framework that addresses structural issues in these industries while preserving leverage under Section 301.

Implications for U.S. Industry

For American manufacturers, importers, and exporters, the agreement provides a short-term reprieve from the steady escalation of trade restrictions. Agricultural producers stand to benefit immediately from renewed Chinese purchasing commitments—up to 12 million metric tons of soybeans by year-end and larger volumes in subsequent years. Semiconductor and critical minerals industries may see near-term stabilization as export controls ease.

However, the arrangement remains conditional. Both sides have pledged to “suspend” rather than eliminate tariffs and controls, signaling that full normalization is far from guaranteed. The next twelve months will be a critical window during which compliance teams must monitor updates from the Office of the U.S. Trade Representative (USTR), the Department of Commerce, and U.S. Customs and Border Protection (CBP) to understand how implementation unfolds.

Looking Ahead

While the latest developments offer some breathing room, they also highlight the fluid nature of trade enforcement in the current environment. Firms should maintain proactive engagement with counsel experienced in Section 232 and Section 301 matters to ensure that compliance measures remain aligned with evolving policy.

The Seoul agreement reflects a tentative de-escalation in the U.S.–China trade confrontation, but it is best understood as a pause rather than a peace. Both governments retain broad authority to reimpose tariffs or controls should negotiations stall. The next phase of engagement will likely determine whether this “rebalancing” represents a durable shift or merely a temporary truce.

For U.S. businesses navigating this uncertainty, careful monitoring and strategic planning remain essential. As new tariff regulations continue to evolve, navigating these changes requires experienced legal counsel. At Liang + Mooney, PLLC, our seasoned tariff lawyers can answer your questions and concerns with sophisticated legal solutions.  If you seek strategic counsel and insight into which tariffs apply to your operations, we invite you to contact us to schedule a consultation.