US-China Trade Truce Offers Temporary Relief as Tariffs Remain High Amid Ongoing Economic Tensions
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US-China Trade Truce Offers Temporary Relief as Tariffs Remain High Amid Ongoing Economic Tensions
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Recent weeks have seen a flurry of activity between Washington and Beijing, culminating in a major development on May 12, 2025. President Trump and Chinese officials reached a deal following negotiations in Geneva. Both sides agreed to temporarily reduce tariffs, suspending 24 percentage points of their respective recent tariff hikes for a 90-day window while keeping a 10% baseline tariff in place on all goods traded between the US and China. According to the White House, this agreement was framed as a “historic trade win” for the United States, designed to reduce tit-for-tat escalation and reopen discussions on market access for American exports. China also committed to suspend its non-tariff countermeasures and the US agreed to remove several recent ad valorem tariff increases targeting Chinese goods, offering American farmers, automakers, and manufacturers some short-term relief.
Despite this truce, tariffs remain at historically high levels compared to the start of the year. The Peterson Institute for International Economics reports that average US tariffs on Chinese exports rose sharply after January 20, 2025—when Trump’s second term began—and currently stand at about 51.1%, covering all Chinese imports. For a brief period in early May, tariffs even reached as high as 126.5% on some Chinese goods before the Geneva agreement brought them back down. On the other side, China’s average tariffs on US exports have climbed to 32.6%, also covering all US-origin goods.
Listeners should also note that US tariffs on steel and aluminum are again making headlines. On June 3, 2025, President Trump announced an increase in Section 232 tariffs on steel and aluminum imports from 25% to 50%. This move, intended to counter what the administration calls “unfair trade practices” and overcapacity, is already impacting global metals markets and could have ripple effects on both US manufacturers and allied exporters.
The Budget Lab at Yale warns these tariffs are likely to contribute to higher consumer prices, with an estimated 1.5% short-run increase in overall costs if the Federal Reserve does not intervene. Trade compliance experts caution that while the immediate truce has offered some certainty, these measures could quickly change again if negotiations stall.
As the 90-day window for the current suspension of major tariff increases ticks down, all eyes are on upcoming US-China trade talks. The outcome could determine whether elevated tariffs stick or if further reductions are in store.
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