The US has reached a new trade agreement with China under which all Chinese imports will face a 55% tariff, while American exports to China will be subject to a reduced 10% tariff. This was the result of two days of talks between diplomats from the two nations in London.
Li Chenggang, China’s international trade negotiator and vice minister of the Ministry of Commerce, described the talks between the two countries as being “very professional, rational, in-depth and candid,” according to the Xinhua News Agency. US President Donald Trump described the US’s relationship with China as “excellent” in a June 11 post on Truth Social announcing the deal.
China-US tariffs: The story so far
This positivity certainly marks a change, as China and the US had been gradually raising import tariffs on each other’s goods since February, starting when the US applied a 10% tariff to pressure the country to prevent the illegal flow of synthetic opioids. But it wasn’t until April 2, when Trump announced sweeping “reciprocal tariffs” targeting all countries with which the US maintains a trade deficit, that tensions really escalated.
China’s reciprocal tariff rate was initially set at 34%, but following a series of tit-for-tat measures from the two nations, this had surged to 145% by April 10. Notably, this escalation occurred despite Trump applying a 90-day suspension on reciprocal tariffs for most countries, excluding China, the day prior.
In response, China raised its tariffs on US goods to 125%. However, in May, both countries reached a temporary agreement to reduce tariffs: China lowered its rate to 10%, while the US cut its rate to 30%, effective for a 90-day period while they negotiated a permanent deal. The truce sent tech stocks soaring, as major tech firms, such as Apple, NVIDIA, and Dell, rely heavily on Chinese components and manufacturing, and high duties would be costly for them.
On June 4, Trump posted on Truth Social, in all caps, that China’s President Xi Jinping is “very tough and extremely hard to make a deal with,” suggesting that little progress was being made. Later that day, he sent letters to all negotiating partners, reminding them of their tariff deadlines and asking that they submit their best trade deal offers. It is unclear whether China received such a letter.
An agreement about tariffs, export controls, students from China
Nevertheless, the two countries appear to have finally reached an agreement, subject to approval by President Xi.
Tariffs
The 55% tariff represents the 10% baseline reciprocal tariff applied to all countries, plus 20% for China’s role in fentanyl trafficking into the US, plus a pre-existing 25% tariff imposed during Trump’s first administration.
Export controls
In his Truth Social post, Trump said that China will resume supplying magnets and rare earth minerals to the US, which had been subject to export controls since April and are essential for building automobiles, semiconductors, and advanced military systems. Meanwhile, the US will be providing China with “what was agreed to.”
Students from China
He added that American universities will continue accepting students from China, appearing to revoke a previous announcement from Secretary of State Marco Rubio that the US would start revoking visas of those connected to the Chinese Communist Party or studied unspecified “critical fields.”
US-China deal is not set in stone yet
A spokesperson for China’s Ministry of Commerce told reporters earlier today that the deal “represents new progress made in resolving each other’s economic and trade concerns.” They added that “both sides need to stick to that agreement,” but that “China always honors its commitments,” perhaps hinting at Trump’s tendency to backpedal. The Wall Street Journal has also reported that the restrictions on earth minerals will only be eased for six months.
The deal was initially drawn up during in-person talks between the two nations in May and agreed upon during a June 5 phone call between Trump and Xi, according to Xinhua. The implementation framework was outlined during the first meeting of the China-US Economic and Trade Consultation Mechanism on June 9 and 10 in London.
Li Chenggang told Xinhua: “We hope that the progress made in the London talks will help further enhance trust between China and the United States, further promote the stable and healthy development of China-US economic and trade relations, and inject positive energy into global economic development.”
US-UK trade agreement
While all other negotiating partners have a deadline of July 8, a trade agreement has only been made with one country other than China so far: the UK. While most British exports remain subject to a 10% baseline tariff, key sectors secured exemptions, including steel, aluminium, and jet engines. This is in exchange for the UK lifting restrictions on US beef and ethanol, and will only take effect on July 9.
The US has delayed tariffs on the EU, but for how long? Read TechRepublic’s coverage about how Europe is navigating its own high-stakes deadline.
