Two months after unveiling what it called broadly balanced and positive preliminary outcomes from the China-US economic and trade consultations, China’s Commerce Ministry is converting a framework of tariff ceilings, twin councils, and agricultural breakthroughs into facts on the ground, and the rest of the trading world is recalibrating.
On Friday evening Beijing time, China’s Ministry of Commerce offered its latest signal that the carefully constructed truce between the world’s two largest economies is holding. Responding to media questions, the ministry confirmed that Washington will allow the executive order that stripped Hong Kong of its preferential trading treatment to lapse, honoring a commitment it said the American side made during bilateral talks in Madrid last year. “The U.S. side’s actions represent an important step in fulfilling the consensus reached during the bilateral economic and trade talks. China appreciates it,” the ministry said in a statement reported by The Associated Press.
The statement was short, but its timing carried weight. It arrived two months, almost to the day, after MOFCOM’s Saturday evening publication of the preliminary outcomes of the China-US economic and trade consultations, the mid-May announcement that reset expectations for the most consequential trading relationship in the world. That release, posted on the ministry’s website in mid-May and issued in English as a spokesperson statement dated May 19, described the results of the consultations as overall balanced and positive, an unusually sunny formulation by the standards of Chinese trade diplomacy.
Fred Gao, a Beijing-based analyst who publishes the Inside China newsletter and translated the communique in full, wrote that the official tone was set as “broadly balanced and positive,” calling it “a fairly upbeat framing.” Just as significant, in his reading, was the qualifier attached to the entire package. The communique described the results as preliminary outcomes and stated plainly that “the two sides are still consulting on the specific details of the relevant outcomes,” which is why no concrete figures appeared in China’s own announcement.
Two months on, the numbers, the institutions, and the sequencing have begun to fill in. What emerges is a de-escalation that Beijing believes it negotiated from a position of strength, that Washington is administering through an unusually open public process, and that trade planners from Rotterdam to Ho Chi Minh City are now studying line by line.
Five points from a Saturday night
The May release capped a compressed diplomatic sequence. The Chinese and US economic and trade teams met in South Korea on May 12 and 13, preparing the ground in the economic and trade field for the leaders’ meeting, according to a MOFCOM statement carried by the state-run Global Times. US President Donald Trump then paid a state visit to China from May 13 to 15, and the two presidents met in Beijing on May 14. In the ministry’s account, President Xi Jinping told his counterpart that the essence of China-US economic and trade relations is mutual benefit and win-win cooperation, and that the outcomes reached by the two teams were, in the translation published by Gao, “good news for the people of both countries and for the world.”
The ministry then set out five preliminary outcomes. First, the two sides will continue to implement the results of earlier consultations and have formed a positive consensus on relevant tariff arrangements. Second, they agreed to establish a Trade Council and an Investment Council to address each side’s concerns, and agreed in principle, working through the Trade Council, to reduce tariffs on products of concern to each side on a comparable scale. Third, they will resolve, or substantially advance the resolution of, a set of non-tariff barriers and market access issues in agriculture. Fourth, they will expand two-way trade, including in agricultural goods, through mutual tariff reductions on a defined range of products. Fifth, they reached arrangements on China’s procurement of aircraft from the United States, paired with American assurances on the supply of aircraft engines and components.
The list grew as details emerged. On May 20, the ministry published a fuller question-and-answer statement on its website, and the Global Times reported that MOFCOM had elaborated on eight preliminary outcomes in all, folding in the extension of the Kuala Lumpur joint arrangement, rare earth export control issues, and market access specifics for agricultural products.
A tariff ceiling and the 30 for 30 lists
The tariff architecture rests on the truce struck in Kuala Lumpur in October 2025, when the two governments agreed to suspend their most damaging measures until November 10, 2026. Those suspensions cover the US 24 percent reciprocal tariffs and China’s corresponding countermeasures, the US 50 percent penetration rule on export controls and China’s related export control measures, and the US Section 301 actions aimed at China’s maritime, logistics, and shipbuilding industries together with China’s responses, according to the MOFCOM statement reported by the Global Times.
An official from MOFCOM’s Department of American and Oceanian Affairs was blunt about what Beijing expects next. It is hoped that the US side will honor its commitments, the official said, and in the future, regardless of whether Washington imposes or replaces tariffs on Chinese goods on any ground, the level of US tariffs on China must not exceed the level agreed in the Kuala Lumpur joint arrangements. Subsequent consultations, the official added, should work to further remove unilateral tariffs on China, creating favorable conditions for expanding bilateral economic and trade cooperation.
The same statement supplied the first hard number of the new phase. The two sides agreed in principle to discuss, under the trade council framework, a reciprocal tariff reduction arrangement covering products of comparable scale, starting at 30 billion US dollars or more on each side, with most favored nation rates, or potentially even lower ones, applying to mutually agreed products of concern. Implementing the arrangement would help stabilize and expand bilateral trade and would provide, in the Global Times account of the official’s remarks, “a useful reference for global openness and cooperation.”
Washington moved quickly to operationalize its half. On June 2, the Office of the US Trade Representative issued a Federal Register notice soliciting public comments on which Chinese-origin goods, expected to cover about 30 billion dollars in imports, should receive tariff relief under the newly chartered US-China Board of Trade, the American name for the Trade Council. The law firm Skadden, in a June 10 client alert, said some participants have called the initial workstream a “30 for 30” approach: roughly 30 billion dollars of US imports from China matched by a comparable Chinese-side list. Comments were due to docket USTR-2026-0430 by July 10, and rebuttals to a companion docket are due by July 27.
The notice asks commenters for granular evidence: average annual import values for 2022 through 2024, China’s share of US imports of each product, whether tariffs have produced inversions in which manufacturing inputs are taxed more heavily than finished goods, and which American consumers, workers, and producers would gain or lose from each modification, according to the Skadden analysis. US Trade Representative Jamieson Greer has said the board is “focused on trade in non-sensitive goods,” excluding high-technology items and products with military applications, and that once stakeholder input is in, his staff will negotiate with Chinese counterparts “over where we think we have the strongest mutually beneficial trade.”
Two councils, one experiment
The Investment Council has attracted less attention but may prove the more novel institution. Gao wrote that the creation of the council “exceeded my expectations,” noting that in working-level exchanges before the talks, the American position had consistently been that Washington was not yet ready to engage China on bilateral investment issues. Treasury Secretary Scott Bessent, in a May 14 CNBC interview cited by Gao, explained that the council’s core purpose is to identify in advance non-strategic, non-sensitive sectors suitable for Chinese investment, so that investments in those sectors would not need to be submitted to CFIUS, the Committee on Foreign Investment in the United States, for review.
Greer has offered a homelier metaphor, describing the investment body as functioning almost as “a firefighter” for emerging disputes rather than as a screening regime, in a CBS News interview cited by Skadden.
For Beijing’s policy community, the institutional layer is the real prize. After MOFCOM spokesperson He Yadong confirmed on June 25 that the two governments had formally agreed to establish the trade council, Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times that the development showed the two sides maintaining dialogue and coordination through institutionalized channels despite lingering complexities. “As the two sides’ economic and trade teams continue communication and encourage and guide enterprises to strengthen engagement, there remains greater room and potential in the future to expand trade scale and deepen industrial cooperation in relevant fields,” Zhou said.
Dairy detentions, bonsai, and an avian flu map
The most granular breakthroughs are agricultural, and from Beijing’s perspective they are pointedly two-way. Under the market access package described by MOFCOM on May 20, the United States committed to lifting the automatic detention measures applied to Chinese dairy and dairy-containing foods since 2008, to accepting trial exports of Chinese bonsai grown in growing media, and to removing automatic detention on three categories of Chinese aquatic products. Washington also agreed to recognize Shandong Province as a zone free of highly pathogenic avian influenza and to expedite the removal of certain Chinese companies from import alert red lists.
These items may read like footnotes beside billion-dollar tariff lists, but each answers a grievance Chinese exporters have nursed for years, in the dairy case for nearly two decades. Automatic detention forces shipment-by-shipment holds, testing, and documentation at US ports, costs that fall hardest on smaller food exporters. Recognition of an avian influenza-free zone in Shandong, one of China’s top poultry-producing provinces, gives Chinese poultry products a sanitary passport the industry has long sought. And the bonsai file, obscure as it sounds, tests whether the two plant-health bureaucracies can clear a product that US rules have effectively barred because of the growing medium it ships in.
Beijing’s reciprocal steps were listed with equal specificity. China resumed registration of eligible US beef suppliers, lifted avian influenza restrictions on qualified US states and resumed poultry imports from them, expedited reviews of US beef facilities suspended over drug residue issues, and agreed to hold exchanges on agricultural biotechnology, the ministry said. The White House fact sheet issued after the summit put numbers on the American side of the harvest: renewed listings for more than 400 US beef facilities, and Chinese commitments to purchase at least 17 billion dollars per year of US agricultural products in 2026, prorated, and in each of 2027 and 2028, on top of the soybean purchases agreed in October 2025.
Asked at a July 2 regular press conference about that 17 billion dollar annual figure, and whether the remaining 10 percent tariff on US agricultural products would be reduced or eliminated, MOFCOM confirmed that the two sides “have set a guiding target for expanding two-way trade in agricultural products and have agreed in principle to include relevant agricultural products in the reciprocal tariff reduction framework arrangement.” But the ministry attached its standard market discipline: “Businesses will conduct trade independently in accordance with market principles and based on actual demand and market conditions.” Purchase targets, in Beijing’s telling, are guiding rather than guaranteed.
American farm interests are visibly eager for the framework to hold. “The last year has been tough in the US for foreign profitability. It’s been as bad as it’s been in my career, my 60 years of farming. And a stronger relationship with China will reverse that,” Jerry Slocum, a director of the United Soybean Board, told the Global Times at the China International Supply Chain Expo in Beijing in late June.
Aircraft and rare earths, the hard edges
On aircraft, MOFCOM confirmed that China’s aviation industry, based on its own civil aviation transport development needs, will import 200 Boeing aircraft in accordance with commercial principles, while the United States provides sufficient guarantees for engine and parts supply. Official American statements described the order as the first such commitment since 2017, with a stated path toward 750 aircraft, according to Skadden’s summary. The market reaction was instructive: Boeing shares slid after the announcement, Gao noted, a reminder that investor expectations had run ahead of what a preliminary framework could deliver.
In Beijing’s calculus, the engine guarantee matters at least as much as the airframes. During last year’s trade war, Washington suspended the export licenses that had allowed General Electric to sell engines to China, a chokepoint for the domestically developed C919 airliner, Gao wrote. Restored certainty of engine and component supply removes a threat hanging over both Chinese carriers’ fleet renewal cycles and the production schedule of COMAC, the C919’s manufacturer.
Rare earths remain the file where Beijing’s leverage is most explicit and its concessions most conditional. Responding to the White House assertion that China would address US concerns about supplies of yttrium, scandium, neodymium, and indium, and about restrictions on the sale of rare earth production and processing equipment and technology, the MOFCOM official said the two teams had conducted in-depth communication on export control issues and would jointly study and resolve each other’s legitimate and lawful concerns. The official then restated the baseline position: China imposes export controls on rare earths and other critical minerals in accordance with laws and regulations, and reviews license applications for compliant civilian uses.
Events since May underline that the control architecture is not being dismantled. On June 22, Beijing added ten US firms, including a rare earth miner, to its export control list, Al Jazeera reported, and trade lawyers have flagged active Chinese enforcement around rare earths and strategic minerals through the summer. The consistent message is that licensing flexibility for civilian end-uses can expand inside a system whose gates Beijing continues to keep.
A truce, not a grand bargain
None of this amounts to a settlement, and Beijing’s own commentary does not pretend otherwise. Gao wrote that after a year of trade war escalations and de-escalations playing out on repeat, the two sides remain in what he called crisis management mode with low levels of trust, and that “landing a mega-deal simply isn’t realistic.” His benchmark for success going into the talks was modest: maintain stability, achieve a breakthrough on coordination mechanisms, and add a few trade deals in areas that are not security-sensitive. By that standard, he judged, “this round of consultations is, without question, a positive development” from China’s perspective.
Semiconductors are conspicuously absent from the package. “No surprise Chip is not included; it’s connected to the AI race, and neither side is there yet,” Gao wrote, arguing that risk management is the realistic ceiling for that file for now.
The American caveats are equally concrete. Greer has emphasized that the United States retains the option to raise China’s tariff rate back to the level of the Busan arrangement reached in late 2025, which Skadden notes could match the rate in place before the February 2026 Supreme Court ruling in Learning Resources, Inc. v. Trump. Ongoing Section 301 investigations into structural overcapacity, forced labor, and compliance with the Phase One agreement could still generate new tariffs. Only 178 product exclusions currently apply under the Section 301 China tariffs, and they expire in November 2026, the same month the Kuala Lumpur suspensions lapse. The calendar, in other words, has a cliff built into it.
Ripples for the EU, ASEAN, and the supply chain map
For third countries, the most consequential design choice is that the planned reductions point toward most favored nation rates rather than preferences reserved for each other. Tariff relief that lands at MFN levels narrows the gap between Chinese goods and those of competing suppliers in the US market, and between American goods and rival exporters in China, without carving out a discriminatory bilateral bloc. That is one reason the MOFCOM framing of the arrangement as a reference point for global openness is being read in trade ministries elsewhere as a deliberate signal rather than boilerplate.
Beijing is simultaneously multiplying its channels beyond Washington. In the same early July briefing cycle in which it discussed agricultural tariffs, MOFCOM described new bilateral trade consultation mechanisms with the European Union and with Germany, and an export promotion campaign in the United Kingdom, according to China Trade Monitor. For the EU, which spent the spring managing its own frictions with Beijing over supply chain rules and cyber issues, a stabilized China-US channel poses familiar diversion questions: products squeezed out of, or newly welcomed into, the American market will reshuffle flows into Europe, and European exporters will press Brussels for the kind of tariff predictability Washington is now negotiating for itself.
For ASEAN economies, the calculus cuts both ways. A durable truce reduces the tariff arbitrage that has driven rerouting, relocation, and transshipment through Southeast Asia since 2018, potentially slowing some China-plus-one investment at the margin. Yet stabilized China-US flows also anchor the multinational supply chains in which Vietnam, Thailand, and Malaysia are deeply embedded, and they lower the risk that Southeast Asian intermediaries are caught in the crossfire of penetration-rule style export controls. What manufacturers across the region say they want most is the commodity both governments are now selling: predictability through November 2026 and, if the Kuala Lumpur arrangement is extended, well beyond it.
For companies, the near-term homework is procedural. Importers whose products are candidates for the non-sensitive lists should track the USTR docket, where rebuttals close on July 27. US exporters should watch which products China nominates for its matching list and how the guiding agricultural targets are administered in practice. And every supply chain planner exposed to the November 10 expiry should model both outcomes: an extension that locks in the current ceilings, or a lapse that reactivates the suspended 24 percent tariffs, the penetration rule, and the shipbuilding measures in a single stroke.
Friday’s Hong Kong announcement fits the pattern Beijing wants to establish, in which commitments made in one round are honored in the next, and each fulfilled item strengthens the case for the larger steps still under negotiation. The US Office of Foreign Assets Control said the national emergency underlying the 2020 executive order had expired and delisted individuals sanctioned under it, even as some officials remain designated under separate authorities, the AP reported. Xi is expected to visit the United States later this year, a trip that would give both governments a natural deadline for converting preliminary outcomes into final ones.
The two sides, as the May communique conceded, are still consulting on the specific details. But for a relationship that spent last year lurching between escalation and truce, the fact that a Saturday night list of preliminary outcomes has survived two months of implementation largely intact is, by Beijing’s own preferred yardstick, broadly balanced and positive.