US-China Tariff Breakthrough: Trump Cuts Rates, Reduces Trade Tensions, and Sets New Economic Baseline for 2025
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US-China Tariff Breakthrough: Trump Cuts Rates, Reduces Trade Tensions, and Sets New Economic Baseline for 2025
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As of June 20, 2025, US-China tariff policy is in a period of rapid transition. On May 12, President Donald Trump reached an agreement with China to partially reduce tariffs and end a tit-for-tat retaliation cycle. Both countries have agreed to cut their previously announced tariffs by 115 percent, while retaining a new baseline tariff of 10 percent on all bilateral goods trade. This deal was formalized after marquee negotiations in Geneva and London, with President Trump declaring it a “historic win” for American workers and industries. China, in turn, agreed to suspend its previous 34 percent retaliatory tariff for 90 days and roll back a host of non-tariff barriers introduced since April. This deal has set the stage for ongoing discussions aimed at further market access and opening up trade for American exports, especially in key sectors like agriculture, energy, and technology, according to the White House.
The tariff structure right now is anything but simple. All Chinese imports to the United States are subject to a 10 percent reciprocal baseline tariff under the International Emergency Economic Powers Act, which took effect in April 2025. Some products, notably those linked to fentanyl precursor shipments, are hit with an additional 20 percent, raising their tariff to an effective 30 percent. Goods that fall under existing Section 301 actions—typically targeting technology and intellectual property abuses—face a 25 percent tariff on top of the baseline, resulting in a total rate of 35 percent for those items. So, for listeners, if you’re importing electronics or other designated products from China, your total tariff burden can be substantially higher.
Consumers and businesses are already feeling these changes. The Budget Lab at Yale reports that the overall average effective US tariff rate stands at 15.8 percent, the highest since 1936, and after market adjustments, it’s projected to settle around 14.7 percent. This has pushed up the general price level by roughly 1.5 percent in the short run and, for households, the average annual income loss is pegged at $2,000 in 2025 dollars. Sectors like clothing and footwear are especially hard-hit, with short-term shoe prices up 33 percent and apparel up 28 percent. That means for many everyday products, the sticker shock is real.
For those tracking the big picture, the United States’ effective tariff rate on China peaked at over 126 percent in early May before this recent round of negotiations and reductions. Today, while down from those historic highs, average US tariffs on Chinese exports still stand at over 51 percent, covering the entire spectrum of goods moving between the two economic giants.
That’s the state of play as of June 20, 2025. Thanks for tuning in to “China Tariff News and Tracker.” Don’t forget to subscribe for our weekly updates and deep dives on US-China economic news. This has been a quiet please production, for more check out quiet please dot ai.
For more check out https://www.quietperiodplease.com/
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