A New Chapter in the Trade War: China and USA Agree to Tariff Reduction
Significant trade issue resolution: The United States and China reduce imposed customs duties.
In a groundbreaking move, the world's economic titans, China and the USA, have agreed to slash their tariffs in an attempt to deescalate the long-standing trade war. This temporary truce, announced on May 12, 2025, comes after intense negotiations held over the weekend in Switzerland.
Let's break down the key provisions of this monumental agreement:
U.S. Tariffs- China will see a remarkable reduction in U.S. tariffs, diving from an astronomical 125% to a more manageable 34%. During the 90-day suspension, U.S. duties on goods from China will be capped at an acceptable 10%.
China Tariffs- Concurrently, China is lowering its tariffs on U.S. goods to 10% from the current 125%.
Non-Tariff Measures- To further bolster this agreement, China has promised to suspend or remove non-tariff countermeasures imposed on the U.S. since April 2, 2025.
Duration and Future Discussions- The tariff reductions will take effect from May 14, 2025, and remain in place until August 11, 2025. During this period, both nations have agreed to abstain from any further tariff-related actions.- The agreement will also establish a platform for continuous discussions about the economic and trade relations between the United States and China. Potential meetings may take place in China, the U.S., or a neutral third country.
This agreement marks a significant shift in the tense trade relationship, symbolizing a temporary ceasefire and providing fertile ground for potential reconciliation and further negotiations.
Following this announcement, international stock markets surged, while the euro faltered against the U.S. dollar. Stock prices of companies heavily reliant on Sino-American trade, such as Maersk and automotive giants like BMW and Daimler, saw significant gains. However, "safe haven" assets like gold were put under pressure due to the optimistic outlook.
The question remains: Will this tariff reduction agreement lead to a long-term resolution or simply a fleeting moment of relief in the tumultuous Sino-American trade relationship? Only time will tell.
[1] Beijing – Washington agree to halt tariffs for 90 days (Financial Times, 2025)
[2] US and China to slash tariffs as they seek to deescalate trade war (CNBC, 2025)
[3] A Step Towards Reconciliation: The US-China Tariff Reduction Agreement (The New York Times, 2025)
[4] The Return of Hope: US-China Trade War Shows Signs of Easing (Forbes, 2025)
In the aftermath of the tariff reduction agreement between China and the USA, various sectors of the finance and business industry experienced significant changes. Stock prices of companies heavily reliant on Sino-American trade witnessed notable gains, while "safe haven" assets like gold came under pressure due to the optimistic outlook. Consequently, this agreement could potentially have far-reaching effects on the finance and business industry as the economic and trade relations between the United States and China continue to evolve.
