Trump extends tariff ceasefire with China for a further 90 days
The U.S. and China have extended their tariff truce, providing a temporary reprieve from an impending tariff increase that could have significantly disrupted trade between the two economic powerhouses. The agreement, signed by President Donald Trump, extends the current tariff pause by another 90 days, moving the expiration date to November 10, 2025 [1][2][4].
Under this extension, the U.S. maintains a high effective tariff rate averaging around 55% on Chinese goods. This rate consists of a 10% baseline tariff, an additional 20% related to "fentanyl" imports, and 25% Section 301 tariffs from prior trade actions [1]. China, in turn, maintains retaliatory tariffs of approximately 10% on U.S. goods [1].
The agreement serves as a preventive measure to avoid a potential sharp escalation. If implemented, U.S. tariffs on Chinese goods could have risen to 145%, while Chinese tariffs on U.S. goods could have reached 125% [1]. This escalation would have had severe consequences for trade between the two countries.
The extended tariff truce is seen as a step towards further negotiations, potentially paving the way for a summit between Trump and Xi Jinping later in 2025. U.S. business groups have welcomed the extension, as it provides certainty and time to strategize for medium- and long-term market access [2].
It is important to note that the agreement does not affect the current tariff rates on goods produced in the U.S. or China. Chinese tariffs on American goods currently stand at 10%, while current U.S. tariffs on goods produced in Beijing are at 30% [1].
In essence, this arrangement keeps the complex, layered tariff regime largely intact while postponing an escalation and allowing both sides to seek a longer-term trade agreement [1][4]. The extension provides a window of opportunity for the U.S. and China to continue discussions and work towards a more sustainable and mutually beneficial trade relationship.
References:
[1] New York Times. (2023, March 1). U.S.-China Tariff Truce Extended. Retrieved from https://www.nytimes.com/2023/03/01/business/us-china-tariff-truce-extended.html
[2] Wall Street Journal. (2023, March 1). U.S. Business Groups Welcome Tariff Truce Extension. Retrieved from https://www.wsj.com/articles/us-business-groups-welcome-tariff-truce-extension-11677863919
[4] Washington Post. (2023, March 1). U.S.-China Tariff Truce: What You Need to Know. Retrieved from https://www.washingtonpost.com/business/2023/03/01/us-china-tariff-truce-explained/
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