US government extends tariff break in trade conflict with China during Xi's visit

In the trade conflict between the USA and China, the two major powers are imposing additional tariffs on each other. Now China's head of state and party leader Xi is traveling to US President Trump - and right at the start of the visit, the US government is sending a conciliatory signal.

At the beginning of China's President Xi Jinping's state visit to the USA, the US government extended a tariff break. The additional tariffs on imports of Chinese goods, which were suspended until November, will be postponed for another two months, according to Finance Minister Scott Bessent. If the agreement had expired, China would also have expanded its export controls on rare earths. So far there has been no confirmation of the extension from the Chinese side.

“Today we agreed to extend the so-called Busan agreement,” Bessent told Fox News. In Busan, South Korea, President Donald Trump and Xi agreed last October, among other things, to suspend high additional tariffs. The trade conflict between the two countries escalated in April last year when the governments imposed additional tariffs of over 100 percent on each other.

As Bessent announced, the postponement of customs duties will now apply until January 10th instead of November 10th. “This gives us more time to look at what we can do on an economic level.” According to Bessent, the agreement was preceded by several meetings with China's Vice Premier He Lifeng.

After Trump took office, the tariff dispute between the two largest economies intensified significantly in the spring of 2025. The USA gradually increased its import tariffs on Chinese goods to up to 145 percent. China responded with counter tariffs of up to 125 percent and imposed export controls on strategically important raw materials. In May, both sides agreed in Geneva to an initial 90-day suspension and extended the pause at further meetings.

Almost at the same time as Bessent's announcement, Xi was greeted by Trump at a military airport near the capital Washington. The heads of state's wives, Melania Trump and Peng Liyuan, also attended the short ceremony. After a short walk along the red carpet, a military band played the national anthems of both countries. During the US anthem, B1 bombers flew over the guests at the ceremony - the noise was so deafening that it made Trump grimace.

Today's three-day state visit includes a reception in the White House, bilateral meetings and a state banquet in the evening. Leading minds from the tech industry are also expected to attend, including Tesla boss Elon Musk, Amazon founder Jeff Bezos, Google and Alphabet boss Sundar Pichai and Apple boss Tim Cook.

Xi speaks of “decisive year”

According to a written address carried by China's official Xinhua news agency, Xi said the United States and China should be partners, not rivals. It is a “crucial year” for the relations between the two countries. The United States and China should promote stable relations with cooperation, moderate competition, reconcilable differences and the prospect of peace, Xi said.

The disputes between the two great powers are not just about tariffs. Beijing criticizes US export controls on semiconductors and chips for the development of artificial intelligence. Washington, however, accuses China of deliberately withholding certain raw materials. To export rare earths, foreign companies currently require permits issued by the Chinese Ministry of Commerce.

However, according to chambers of commerce, the approval process is considered opaque and complex because the authority requires a lot of detailed information about the use of the raw materials. Sometimes licenses are not granted without giving reasons. The USA had already criticized China in advance for not keeping its promise to reliably supply rare earths again. Officially, China argues that it wants to use export controls to prevent the use of rare earths for military purposes.

For China's head of state and party, it is the first trip to the USA since 2023, when he traveled to the APEC economic summit in California and met Trump's predecessor Joe Biden. Trump invited Xi to the White House during his visit to Beijing in mid-May.

Topics in the political talks between Trump and Xi are also likely to include security in dealing with artificial intelligence as well as global conflicts, including the Iran War and the Russian war of aggression against Ukraine. Dealing with Taiwan could also play a role: The USA sells weapons to the island state, which has been governed independently and democratically for decades, while Beijing claims Taiwan for itself and has not ruled out military action to take over the island.