Trump "expects to lower fentanyl tariff"… S. Korean firms 'upset' [Lee Sang-eun's Washington Now]

Donald Trump, President of the United States, said on the 30th that he may lower the "fentanyl tariff" applied to China ahead of a summit with Chinese President Xi Jinping scheduled to be held in Busan. He offered a tariff cut as a "carrot" to win concessions from China, such as the resumption of soybean imports.

President Trump told reporters aboard Air Force One on the 29th as he flew from Haneda Airport in Japan to Gyeongju for the APEC summit, "I expect them to lower it (the tariff) because I believe they will cooperate to resolve the fentanyl issue." He added, "They will do what they can."

Earlier, The Wall Street Journal (WSJ), citing U.S. trade officials, reported that the U.S. proposed to China lowering the current 20% fentanyl tariff by 10% points to 10%. In return, the U.S. asked China to restart imports of U.S. soybeans, which China has suspended this year, the WSJ said. President Trump said, "The fentanyl issue will be one of the key topics," and added, "We will also discuss farmers' issues (such as soybean exports)."

If the fentanyl tariff is reduced by 10% points, the U.S. tariffs on China would fall from an average of 55% to about 45% (base tariff 10% + fentanyl tariff 10% + existing tariffs about 25%). If U.S. tariff rates on China fall, South Korean companies could find it relatively difficult to secure price competitiveness.

Regarding the easing of rare earth export controls, a key agenda item for the U.S.-China summit, working-level officials from both countries agreed to a one-year grace period for China to strengthen controls. When asked whether this was sufficient, President Trump replied, "We haven't renegotiated the timing, but we'll work something out well."

The issue of easing U.S. semiconductor export controls is also expected to be raised. President Trump commented on NVIDIA's latest AI semiconductor, Blackwell, saying, "This is a really tremendous chip," and, "I think I will probably talk to Chairman Xi about (the Blackwell export issue)."

In July, the U.S. allowed NVIDIA's China-dedicated H20 chip to be exported to China. At the time, President Trump said, "We may allow the export of a lower-performance version of the Blackwell chip," which prompted the Chinese government to angrily suspend all imports of NVIDIA chips. Jensen Huang, CEO of NVIDIA, argued at the developer event (GTC) that "if U.S. semiconductors are not exported, demand for semiconductors from Chinese firms will surge," which would significantly accelerate China's technological development.

The WSJ reported that the Chinese negotiating team also hopes U.S. measures limiting exports of key software, such as electronic design automation (EDA) software, will be eased. However, regarding this, U.S. Treasury Secretary Scott Bessent said in an interview on the 26th that there is no change to U.S. export control measures.

Port usage fee reductions are also a contentious issue. Since the 14th, the U.S. has been charging Chinese vessels entering U.S. ports a port usage fee of $50 per net t. In response, China has imposed entry fees on U.S. vessels. However, it is highly likely that the two sides will lift or substantially ease these measures during the U.S.-China summit.

Washington=Lee Sang-eun, correspondent selee@hankyung.com