WASHINGTON, May 13 (Reuters) – The United States and China are expected to move this week, albeit slowly, toward a managed trade mechanism for non-sensitive goods, with each side identifying about $30 billion in products on which they could reduce tariffs and sell to each other, without exceeding national security limits.
The so-called ‘Trade Council’ was first broached by US Trade Representative Jamieson Greer in March as a key agreement to be delivered at this week’s summit between US President Donald Trump and Chinese President Xi Jinping.
The contours of the plan remain vague, but one important shift from previous talks is clear: Washington is no longer demanding that Beijing change its state- and export-driven economic model to become more like the market- and consumer-driven U.S. model.
Instead, the effort is focused on numerical trade targets in non-strategic sectors while maintaining broad tariffs and export controls on technologies sensitive to national security.
Adaptive approach
“This is not a situation where we’re going to get China to change the way it governs, the way it manages its economy,” Greer told Fox Business Network last week. “All of this is built into their system, but I think there is a world where we have figured out where we can optimize trade between China and the United States to get more balance.”
He likened the mechanism to a plug ‘adapter’ that can help connect two incompatible economic systems.
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US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng met on Wednesday for three hours in Incheon, South Korea, to lay the final groundwork for the economic proposals that Trump and Xi will discuss in Beijing. But the two top economic officials did not issue any statement on the preliminary meeting.
Four people familiar with the Trump administration’s goals said they expected a $30 billion trade barrier reduction deal to launch the new mechanism. But it is unclear whether any specific deliverable will be agreed upon by Trump and Xi, or whether this will be achieved in later meetings.
Former negotiator for the Office of the US Trade Representative Wendy Cutler, who runs the Asia Society Policy Center in Washington, said both sides “are coming together” around a $30 billion to $50 billion basket of goods to reduce tariffs or other barriers.
‘The non-sensitive basket is now a very small part of our overall trade with China. So maybe this Trade Council will start with that’ and expand in the future, Cutler said at an Asia Society virtual forum on Tuesday.
Two-way merchandise trade between the U.S. and China declined 29%, from $582 billion in 2024 to $415billion, with the U.S. trade deficit falling nearly 32% to $202 billion in 2025, the lowest in two decades, according to U.S. Census Bureau data.
The U.S. Trade Representative’s office and the U.S. Treasury declined to comment further on the proposed mechanism ahead of the Beijing summit.
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China avoided using the Commerce Council moniker and said in March that the two sides had ‘agreed to explore the establishment of working mechanisms to expand economic and trade cooperation’, without elaborating.
Energy and agriculture in focus
With the US aiming to increase sales of energy and agricultural products to China, Beijing’s tariffs on these commodities are a possibility.
China maintains an extra 10% general tariff on all U.S. imports, matching the current 10% temporary U.S. tariff on Chinese goods.
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In addition to this tariff and pre-existing ‘most favored nation’ tariffs, Beijing imposes retaliatory tariffs on US imports of 10% on crude oil, 15% on liquefied natural gas, 15% on coal and up to 55% on beef.
The US maintains 7.5% tariffs on a range of Chinese consumer products imposed in 2019, at the height of the trade war with China in Trump’s first term. These include flat-screen televisions, flash memory devices, smart speakers, Bluetooth headphones, bedding and multifunction printers, as well as various types of footwear. The U.S.’s temporary 10% global tariff, set to expire in July, is in addition to these fees.
(Reporting by David Lawder)
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