On Monday, May 12, 2025, the White House and China’s Ministry of Commerce (MOFCOM) released a joint statement in which they committed to lowering reciprocal tariff rates from 125 percent to just 10 percent for a period of 90 days. The existing 20 percent tariff on Chinese goods appears to remain in place, meaning the final tariff rate on Chinese goods will be 30 percent.
The agreement follows a meeting between Chinese Vice Premier He Lifeng, the US Secretary of the Treasury Scott Bessent, and US Trade Representative Ambassador Jamieson Greer, in Geneva over the weekend.
In a statement released on Sunday, Bessent said that the two sides had made “substantial progress […] in the very important trade talks”, while a MOFCOM spokesperson on Monday called the agreement “an important step for the two sides to resolve differences through equal dialogue and consultation”.
In addition to lowering the duties, China has agreed to suspend or remove other non-tariff countermeasures it has taken against the US since the reciprocal tariffs were first imposed on April 2, 2025.
Key Highlights from the Joint Statement on the US-China Economic and Trade Meeting in Geneva:
- China and the US to lower reciprocal tariff rates to 10% for 90 days by May 14.
- US’s final baseline tariff rate on Chinese goods to be 30%.
- China to suspend or remove “non-tariff countermeasures” taken against the US.
- Mechanism to continue bilateral discussions on economic and trade relations to be established.
What have the US and China agreed to?
The headline agreement mentioned in the joint statement is the reduction of the two-way reciprocal tariffs from 125 percent to just 10 percent by May 14. The 10 percent ad valorem tariff is the “minimum baseline tariff” that the US has implemented on all trade partners since April 2.
After the US imposed a 34 percent “reciprocal tariff” on China on April 2, China retaliated with a matching tariff on US goods. On April 9, Trump escalated the standoff by increasing the tariff again, with the two-way rate eventually peaking at 125 percent amid a series of tit-for-tat moves.
In the new agreement, the US and China have agreed to entirely cancel the higher reciprocal tariff rates imposed in succession from April 9. The 34 percent rate initially imposed by the US on April 2 and by China on April 4 has been amended to 10 percent for an initial period of 90 days. This suggests that, should no further deal be reached in the next 90 days and this period is not extended, the tariff rate will return to 34 percent, not 125 percent.
Note that while the reciprocal tariff rate on Chinese goods was 125 percent, the final baseline tariff rate was 145 percent, as this duty was levied in addition to the 20 percent tariff rate that the US imposed on China earlier in the year. If the 34 percent reciprocal tariff rate is reinstated, the tariff on China would return to 54 percent.
In addition to lowering the tariffs, China has agreed to “adopt all necessary administrative measures to suspend or remove the non-tariff countermeasures taken against the United States since April 2, 2025”. The statement does not mention what these countermeasures are, but since this date, China has taken several measures to counter the US’s trade actions besides tariffs.
On April 4, MOFCOM and China’s Customs Administration restricted the export of seven different types of rare earths, including various derivations of samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, due to their potential “dual-use attributes”. On the same day, MOFCOM also placed 16 American companies on the “export control list” and 11 American companies on the “unreliable entities list”. A further 12 American companies were placed on the export control list and six on the unreliable entities list on April 9.
Also on April 4, China’s State Administration for Market Regulation (SAMR) announced an investigation into DuPont China Group Co., Ltd., the Chinese subsidiary of the American chemicals giant DuPont, for suspected violations of China’s Anti-Monopoly Law.
What have they not agreed to?
The joint statement makes no mention of the 20 percent tariff rate that Trump imposed on China in two rounds in February and March, which the Trump administration has dubbed the “fentanyl tariffs” for their purported objective of targeting fentanyl imports into the US. This suggests that these duties remain in place. In a press briefing on Monday, Greer confirmed as much, saying that fentanyl was “on its own track” and that the “issue remains unchanged for now”. This means that the final tariff rate on Chinese goods entering the US will be 30 percent, not 10 percent.
Additionally, China has not agreed to lift the tariffs it placed on some US goods in retaliation for the two rounds of tariffs that the US imposed in February and March. These tariffs are:
- A 15 percent tariff on coal and liquefied natural gas;
- A 10 percent tariff on crude oil, agricultural machinery, large-displacement cars, and pickup trucks;
- A 15 percent tariff on US chicken, wheat, corn, and cotton; and
- A 10 percent tariff on sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables, and dairy products.
Before April, China also took a series of non-tariff measures in response to the tariffs on Chinese goods. These include export controls on rare earth metals, the addition of US companies to the unreliable entities list, and an antitrust probe into Google. The US also took a series of non-tariff actions in the period leading up to April 2, including signing a memorandum restricting Chinese investment in the US on national security grounds and adding dozens of Chinese companies to the Entity List.
The joint statement also makes no mention of the reinstatement of the de minimis exemption, a rule that allows packages valued under US$800 to enter the US without customs duties or inspections. On April 2, Trump signed an executive order ending the de minimis exemption for parcels originating from the Chinese mainland and Hong Kong. The de minimis rates were gradually raised along with the reciprocal tariffs, culminating in an ad valorem tariff of 120 percent on the declared value of the parcel or a per-item rate of US$100 from May 2, rising to US$200 from June 1.
The current agreement also does not address the fees implemented on Chinese vessels docking at US ports announced by the US Trade Representative (USTR) on April 17, which are set to come into effect later this year.
Other tariffs, both universal and those specifically targeting China, such as the 25 percent steel and aluminum tariffs, the 25 percent auto tariffs, and the Biden-era tariffs on solar cells, semiconductors, and other tech-focused products, also remain in place.
Is a broader trade deal on the horizon?
In the joint statement, China and the US committed to establishing “a mechanism to continue discussions about economic and trade relations.” This mechanism will be represented by Vice Premier He on the Chinese side, and Representative Greer and Secretary Bessent on the US side.
It is not yet clear what the further discussions will entail, but many possible concessions are on the table, including agreements that could reduce the US’s trade deficit with China and potentially expand US firms’ access to China’s markets. Additionally, China could agree to purchase more US goods to help offset the trade imbalance, similar to the Phase One deal from 2020.
While tariffs on some goods could be further lowered, the 10 percent minimum baseline tariff appears likely to remain. On May 8, the US and the UK reached a trade deal that aimed to enhance two-way trade by lowering barriers to entry. However, the 10 percent tariff levied on the UK was not removed as part of the deal, despite the US having a trade surplus with the UK. Instead, the deal included marginal tariff reductions on specific goods, such as vehicle imports from the UK.
There will also be many other issues on the table that cannot be easily resolved. For one, the US’s trade deficit with China is one of Trump’s core grievances, to the extent that he declared it a national emergency. Following the meetings, Greer reiterated this issue: “Just remember why we’re here in the first place — the United States has a massive $1.2 trillion trade deficit.” He added that the US is “confident” that the agreement reached between China and the US “will help us to work toward resolving that national emergency.”
Lowering the US’s trade deficit with China will not be easy to achieve given the two countries’ current economic structures. Under Trump’s previous term in office, China and the US reached a trade deal in early 2020, which saw China commit to purchasing a minimum of US$200 billion worth of additional US goods and services over a period of two years, including manufactured goods, agricultural goods, energy goods, and services. However, China ultimately did not buy the amount of goods agreed to in Phase One of the trade deal.
Nonetheless, the new agreement already exceeded expectations, potentially setting the stage for more constructive trade negotiations in the future – especially given that other recent deals, like the UK-US one, have been relatively modest in scope, suggesting that the US could be less demanding in its commitments from China.
