Tax insight

US reaches limited trade deal with China and signs trade agreements with ASEAN partners

Insight
3 minute read
November 04, 2025

What happened?

During the Association of Southeast Asian Nations (ASEAN) Summit in Kuala Lumpur from October 26-28, the United States announced a series of new trade and strategic agreements with countries across Asia, including reciprocal trade deals with Malaysia and Cambodia, and framework agreements with Vietnam and Thailand. A separate economic and trade deal with China was reached following meetings between President Trump and Chinese leader, Xi Jinping in Busan, South Korea. The regional pacts focus on tariff reduction, digital trade, and critical mineral cooperation.

The economic and trade deal between the United States and China includes a reduction on fentanyl-related tariffs for imports from China, renewed agricultural purchases, and a pause on Chinese export controls. Specifically, China committed to stop the flow of fentanyl-precursor exports into the United States and to effectively eliminate its current and proposed export controls on rare earth elements and other critical minerals. According the White House fact sheet, China also agreed to end retaliatory tariffs and non-tariff countermeasures against US agricultural and other goods, and to purchase at least 12 million metric tons of US soybeans in the last two months of 2025 and at least 25 million metric tons a year from 2026 to 2028. In turn, the US will reduce the cumulative tariffs on imports from China related to fentanyl controls by 10% (effective November 10) and suspend for one year the implementation of responsive actions under the Section 301 investigation into China’s targeting of the maritime, logistics, and shipbuilding sectors. The United States will negotiate with China pursuant to Section 301 during this suspension period, while continuing its cooperation with South Korea and Japan to revitalize American shipbuilding. Together, these actions signal a temporary easing of tensions and a shift toward managed competition and sector-specific cooperation.

Observation: This agreement could significantly affect import duty planning, origin certification, and export-control compliance, particularly for companies sourcing from China or operating in US-China supply chains. This deal also avoids an increase in US tariffs on Chinese imports that was otherwise scheduled to take effect on November 10, a change that could have had significant impacts on trade. Instead, tariffs have been reduced and tensions eased, signaling a period of relative stability and reduced volatility in the short- to medium-term outlook. Companies should assess how tariff reductions and export-control suspensions might influence customs valuation, transfer pricing margins, and the interplay of duty relief and permanent establishment risk.

Why is it relevant?

Collectively, these initiatives mark a major strategic shift in US efforts to stabilize supply chains, expand market access, and balance China’s influence in the Indo-Pacific region. For companies, the new trade agreements, particularly the United States and China deal, could significantly influence supply chain strategies, sourcing decisions, and cross-border tax planning across Asia. Reduced tariffs and renewed agricultural and manufacturing trade flows may prompt US multinationals to revisit transfer pricing policies, especially for operations involving China suppliers or downstream production in Malaysia, Cambodia, Vietnam, and Thailand. The inclusion of provisions on digital trade and critical minerals also points to potential shifts in indirect tax treatment, customs valuation, and compliance requirements as regional trade frameworks realign around China’s evolving role in global value chains.

Actions to consider

Companies should assess how the renewed United States and China trade deal and related regional agreements may impact intercompany pricing, duty planning, and supply chain structures. Businesses may want to model potential tariff and sourcing changes, evaluate exposure to evolving China export control measures, and determine whether adjustments in manufacturing or distribution could create new permanent establishment risks. It will also be important to monitor forthcoming implementation guidance and bilateral regulations to anticipate indirect tax, customs, and reporting implications as these agreements are put into practice.