U.S. and China Agree to Negotiations Amid 90-Day Tariff Reduction
The United States and China agreed to a 90-day pause on most tariffs imposed on each other since April while the two countries negotiate a trade deal. The agreement de-escalates the trade war between the world's largest economies. (See U.S.-China Tariffs Accelerate Changes in Global Economy.) Overall, by May 14, 2025, the United States will reduce tariffs imposed in 2025 to 30% while retaining earlier tariffs, while China will reduce its tariffs to 10%.
U.S. Tariff Reductions
The United States agreed to reduce reciprocal and punitive tariffs on China:
Reciprocal tariffs: The United States will reduce the 34% reciprocal tariff rate imposed on April 2 to 10%;
Additional duties: The United States will remove the 125% additional duties imposed on April 8, 2025 and on April 9, 2025, when Trump increased tariffs on China and paused reciprocal tariffs for 90 days for all other countries.
The United States retains all tariffs imposed on China prior to April 2, 2025. This includes:
Section 301 tariffs previously imposed during the Biden administration;
Section 232 tariffs;
Additional 20% tariffs imposed under the International Emergency Economic Powers Act (IEEPA) in response to the fentanyl national emergency. (Trump ordered 10% additional tariffs on Chinese imports on February 1, 2025 and increased the rate to 20% on March 3, 2025.);
10% baseline reciprocal tariffs.
This leaves the effective U.S. tariff rate on most imports from China at 40%.
Chinese Tariff Reductions
China agreed to reduce the retaliatory tariffs it announced since April 4, 2025 and will suspend or remove the non-tariff countermeasures taken against the United States since April 2, 2025. This effectively reduces the tariff rate from 125% to 10%. This includes:
Retaliatory tariffs: China agreed to reduce its 34% retaliatory tariff rate on U.S. goods announced on April 4, 2025 to 10%;
Additional duties: China will remove additional duties imposed on U.S. goods after April 2, 2025. This includes tariffs of 84% and 125% on U.S. imports as countermeasures against the U.S. “reciprocal tariffs.”
Nontariff measures: China also agreed to suspend or remove nontariff countermeasures taken against the U.S. since after April 2, 2025. This includes, most notably, restrictions on the export of critical minerals.
Ongoing Negotiations
The United States and China will establish a mechanism to continue discussions about economic and trade relations. Treasury Secretary Scott Bessent said “neither side wants a decoupling” and said the recent tariffs had reached the “equivalent of an embargo.” Despite this sentiment, there is no guarantee that the 90-day pause will produce a trade war settlement, and there is uncertainty as to what a deal might include.
Trump has stated that he would raise tariffs if the parties do not reach a deal. Notably, current tariff levels correspond to Trump’s campaign proposal for a 10% to 20% tariffs on all countries and a 60% “surcharge” on imports from China.
The agreement and planned discussions solidify the view that the global trading system has moved away from multilateralism based on the World Trade Organization to a bilateral system based on negotiations between individual countries.
Most significantly, the tariff reductions indicate that the Trump administration’s trade policy toward China is focused on reducing the trade deficit with China and addressing nontariff barriers rather than on “decoupling” economies.
Geopolitically, the United States is currently negotiating trade agreements with 16 other countries. These countries increasingly must choose between aligning with either the United States or China. This indicates that these negotiations will ultimately restructure the global economy and global balance of power along geoeconomic lines.