Trump says fentanyl tariff cut, 'farmers,' Nvidia chips up for discussion with Xi as China confirms meeting

U.S. President Trump and Chinese President Xi Jinping are scheduled to meet in South Korea, aiming to de-escalate bilateral trade tensions ahead of a critical November 10 tariff truce expiration. Key discussion points include potential U.S. reductions in fentanyl-linked tariffs and loosened tech export controls, in exchange for Chinese commitments on fentanyl precursor crackdowns, guaranteed rare earth access, and approvals for U.S. companies like Boeing and TikTok. Analysts anticipate Beijing may offer a resolution on fentanyl to facilitate a tariff reduction by the November 10 deadline, which could significantly impact market sentiment and specific sectors such as semiconductors, rare earths, and aviation.

Analysis

The upcoming meeting between U.S. President Trump and Chinese President Xi Jinping is pivotal, occurring before the November 10 tariff truce expiration and potential new 100% tariffs. Bilateral tensions have escalated, with China imposing rare earth export controls and the U.S. threatening further restrictions. A key outcome could be a reduction in fentanyl-linked tariffs from 20% to 10%, potentially lowering the average duty on Chinese imports from 55% to 45%.

The U.S. is considering loosening export controls on semiconductor equipment and AI chips, including Nvidia's Blackwell chips, and rolling back the 100% tariff threat. In exchange, China is expected to address fentanyl precursor exports, guarantee rare earth access, and approve purchases of Boeing aircraft and TikTok's U.S. operations. These negotiations directly impact technology, aviation, and critical raw materials sectors.

Evercore ISI strategist Neo Wang anticipates Beijing will resolve the fentanyl deadlock, facilitating U.S. tariff reductions by November 10. This scenario, reflecting a moderately positive sentiment and high market impact, suggests a renewed tariff truce is plausible. The discussions underscore the complex interplay of trade, geopolitical, and technological interests.

Key Decisions for Investors

• Closely monitor the Trump-Xi meeting outcomes for specific tariff adjustments and export control changes, particularly concerning semiconductor equipment and AI chips, as these will directly influence technology sector performance.
• Re-evaluate positions in companies like Boeing (BA) and Nvidia (NVDA), as potential trade concessions could significantly impact their market access and sales volumes.
• Assess the implications for global supply chains and commodity markets, especially rare earths, given the potential for agreements on access and export controls.