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Timely insights from the Economy, Strategy & Finance Center
The Administration announced a 90-day trade truce between the US and China on Monday, May 12, after parties met in Switzerland over the weekend. Both countries agreed to lower tariffs by 115 ppts while bilateral trade negotiations continue. This will reset the tariff rates to 30% for Chinese goods coming into the US, and 10% for US goods entering China. US sectoral tariffs, such as those on steel and automotive parts, remain unchanged, as do Chinese retaliatory tariffs (such as on US agricultural products) that it imposed following the initial US 20% US (fentanyl-related) tariffs.
Why it matters: The US imported $439 billion in goods from China in 2024, more than any other economy except for Mexico. Tariff rates between US and China had escalated to well above 100% following April 2’s “Liberation Day” announcement.
These levels dramatically slowed trade between the two countries, with the Ports of Los Angeles and Long Beach seeing a 44% drop in docked vessels the week of May 4, compared to the same week last year. This low level of US-China shipping, unseen since the COVID-19 pandemic, would have resulted in consumer goods shortages if it persisted. Companies—particularly manufacturers that use Chinese components and those in the transportation sector—would have also been severely impacted, with business
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