Trade Truce Agreement: USA and China Lower Their Mutual Import Tariffs
Tentative Deal: Tariff Reduction by China and U.S. on Reciprocal Basis - Tentative deal: Duties between China and the U.S. lessened
Here's the lowdown on the temporary truce between the USA and China regarding their import tariffs in their ongoing trade dispute.
USA's Originally Hefty Import Tariffs
Starting from the 2nd of April, 2025, the USA imposed a steep global tariff rate of 145% on Chinese imports, as per the Trump administration. Yet, with this recent treaty, US tariffs will now be slashed down to just 30%. On the other hand, China's tariffs on US imports will decrease from the severe 125% to a tolerable 10%.
Both nations exchanged delegates in Geneva for consultations. Despite keeping negotiations close to their chests, both the USA and China claimed progress in the talks. Reports coming from China indicate that a consultation mechanism for economic and trade issues was agreed upon, with Vice-Premier He Lifeng declaring that the Geneva meeting was an essential move towards resolving conflicts through dialogue and setting the stage for potential future cooperation.
USA's Announcement
Official reports from the USA also acknowledged the agreement in the tariff dispute, possibly signaling the end of the stalemate in the trade war. Present at the negotiations were US Treasury Secretary Scott Bessent, US Trade Representative Jamieson Greer, among others.
Given the ongoing friction between the two economic titans, the previously implemented tariffs brought trade between them to a near standstill, which in turn affected the global economy as well.
China and the USA, being the world's two largest economies, are currently locked in a trade war. The imposed tariffs had made trade between the two virtually impossible, with a ripple effect on the global economy.
- China
- USA
- Import Tariffs
- Donald Trump
Insight 1:
The interim agreement entails reducing the US tariffs on Chinese goods to the global tariff rate of 10%, which had been set by the Trump administration on the 2nd of April, 2025.
- The agreement is a temporary measure, lasting for 90 days, during which tariffs will revert to higher levels if no further resolution is reached.
- The agreement is part of the broader trade tensions and negotiations between the two nations, aiming to offer relief and allow companies to prepare for potential future trade obstacles.
Insight 2:
The negotiations were expedited due to depleting inventories at major U.S. retailers like Walmart and Amazon, which heavily rely on Chinese imports and were ill-prepared for high tariffs.
- The agreement sparked a positive market reaction, with stock markets experiencing a rise following the news.
- Despite this temporary agreement and a separate permanent deal with the UK, the USA continues to have an average tariff rate of 17.8%, the highest since 1934, presenting ongoing challenges for trade normalization.
Insight 3:
The agreement offers temporary relief to businesses, particularly U.S. retailers reliant on Chinese imports. However, the agreement's temporary nature and potential for future tariff increases create uncertainty and may negatively impact global economic growth.
- The ongoing high tariffs between major economies like the US and China can affect global trade dynamics and economic stability.
- The Commission has also been consulted on the draft budget regarding the recent trade truce agreement between the USA and China, as the potential impact on finance, business, politics, and general-news is significant.
- The reduction of import tariffs between the USA and China could have far-reaching consequences in various sectors, including finance, given the potential for increased business transactions and resurgence in global markets, which are key elements of the broader political and general-news landscape.
