13th May 2025 (13 Topics)
1
May
2
May
3
May
5
May
6
May
7
May
8
May
9
May
10
May
12
May
13
May
US-China Tariff Deal
Context
In a surprise move, the United States and China agreed to roll back major portions of their tariff war in a temporary deal that marks the most significant thaw in their trade tensions since 2018. The deal is a 90-day truce, with both countries slashing tariffs and pausing non-tariff retaliatory actions.
Brief Background
- The US-China trade war began in 2018. The US imposed steep tariffs citing:
- Unfair trade practices by China
- Intellectual property theft
- Technology transfer issues
- Massive trade deficits
- Escalation (2018–2023): China responded with its own tariffs. Both countries imposed duties on hundreds of billions of dollars of goods.
- Over time, tariffs increased:
- US tariffs peaked at 145% on select Chinese goods.
- Chinese tariffs rose to 125% on US imports.
What has been agreed upon?
- Tariff reduction: The US has agreed to reduce its tariffs on Chinese goods from 145% to 30%. China will cut its tariffs on US goods from 125% to 10%.
- Time frame: This rollback is valid for 90 days from May 14, 2025, during which both sides will continue negotiations.
- Non-tariff measures: China has also agreed to suspend:
- Export restrictions on critical minerals (including rare earth elements).
- Anti-monopoly investigations on American firms like DuPont.
- Use of “unreliable entity list” against US companies.
- Exceptions: The US has retained a 20% levy related to fentanyl control, aiming to pressure China to act against illegal opioid trade.
Why are tariffs controversial?
- Impact on economies:
- The US economy witnessed its first quarterly contraction since early 2022 as importers rushed to beat high tariffs.
- China’s exports to the US declined sharply, affecting its manufacturing sector. April 2025 saw Chinese factory output shrink at the fastest pace in 16 months.
- Impact on global trade and markets:
- The trade war disrupted global supply chains, particularly in electronics and chemicals.
- It increased costs for consumers and businesses.
- Investor confidence was shaken globally, triggering stock market volatility and recession concerns.
What is a trade war?
|
More Articles
Courses
Study
Notes
Home
Resources
More
