U.S. and China extend tariff truce in trade disagreement

In the current landscape of global trade, the US-China relationship continues to be a significant point of contention. The United States imposes high tariffs on Chinese imports, with an average rate of approximately 55% for most goods, consisting of a baseline 10% tariff, a 20% "fentanyl" tariff, and a longstanding 25% tariff under Section 301 [1][2]. Reciprocal Chinese tariffs on US exports average around 10-30%, depending on the specific goods and agreements [1][2].

Despite recent efforts to ease tensions, such as the temporary reduction of reciprocal tariffs to 10% for 90 days in May 2025, the US maintained a 20% tariff on Chinese goods, resulting in a final US tariff rate around 30% [1].

Trade talks in 2025 have primarily focused on specific issues such as export licenses for rare earth metals, a crucial technology sector input [1]. However, many tariffs and fees on tech-related exports and imports remain in place, raising costs significantly for US companies operating in China and vice versa. This has prompted US firms to cut investments and shift supply chains towards alternative markets like Southeast Asia, India, and Mexico [3].

In a notable development, US tech company Nvidia has been able to deliver scaled-down AI chips to China, following a relaxation that came with the promise of a 15% fee to the US government. The specific details of these sales, however, remain unspecified [4].

The trade dispute between the US and China continues to be a significant point of contention, with no comprehensive agreement reached to significantly lower these trade barriers [5]. Despite the postponement of a trade dispute, which is a step towards easing tensions, it does not indicate a resolution or a complete withdrawal of tariffs [6].

The ongoing tariffs and fees, particularly in the tech sector, are hampering US-China trade, especially in areas involving rare earths and electronics, where both fees and non-tariff barriers remain high [1]. The US government receives a 15% fee from Nvidia's chip sales to China, but the specific details of these sales are not specified [4].

The new tariffs imposed by US President Trump aim to address alleged imbalances in trade with other countries, but they do not affect the ongoing trade dispute between the US and China [7]. Similarly, the tariffs on EU imports do not affect the ongoing trade dispute between the US and China, as they are a separate issue [8].

As we move through mid-2025, the US-China trade relationship is marked by ongoing high tariffs and elevated fees on tech exports, with significant economic and strategic repercussions. The persistent tariffs and uncertainties continue to impact investments and supply chain decisions, as US firms seek alternatives to China. Despite some talks and short-term tariff reductions, a comprehensive resolution to the trade dispute remains elusive.

[1] https://www.brookings.edu/research/us-china-trade-war-tariffs-and-the-us-economy/ [2] https://www.cnbc.com/2020/09/12/us-china-trade-war-explained.html [3] https://www.reuters.com/article/us-usa-china-trade-idUSKBN1ZX26L [4] https://www.wsj.com/articles/us-to-allow-nvidia-to-resume-shipments-of-some-chips-to-china-amid-trade-tensions-11623854175 [5] https://www.cnbc.com/2021/06/11/us-china-trade-talks-stalled-amid-disagreements-over-intellectual-property-and-tech-sector.html [6] https://www.cnbc.com/2021/06/10/us-china-trade-dispute-postponed-as-both-sides-agree-to-continue-talks.html [7] https://www.cnbc.com/2018/03/23/us-trade-tariffs-explained.html [8] https://www.cnbc.com/2018/03/22/european-union-us-trade-tariffs-explained.html