Today, on May 12, 2025, President Donald J. Trump announced a new trade agreement between the United States and China, a significant step in U.S. trade policy. The deal reinforces the administration’s “America First” approach and sets the stage for tariff reductions, the rollback of retaliatory measures, and renewed discussions to open up market access for American exports.
Key Outcomes of the Agreement
As part of the deal, both the United States and China will reduce tariffs by 115%, while maintaining a 10% tariff as a new baseline. Other existing U.S. trade measures will remain unchanged. These adjustments are set to take effect by May 14, 2025.
Actions by China:
- China will remove all retaliatory tariffs announced since April 4, 2025.
- It will also suspend or eliminate non-tariff countermeasures introduced since April 2, 2025.
- A previously announced 34% tariff on U.S. goods will be suspended for 90 days, although a 10% tariff will stay in place during this period.
Actions by the United States:
- The U.S. will withdraw additional tariffs imposed on April 8 and 9, 2025.
- However, it will maintain all duties established before April 2, 2025, including:
- Section 301 and Section 232 tariffs,
- Duties tied to the fentanyl-related national emergency under the International Emergency Economic Powers Act,
- Most Favored Nation (MFN) tariffs.
- A 34% reciprocal tariff introduced on April 2, 2025, will also be paused for 90 days, while a 10% tariff remains in place.
This 10% baseline tariff is described by the U.S. administration as a measure to promote domestic manufacturing, strengthen supply chains, and prioritize American jobs and industries.
A Strategic Shift in Trade Relations
The administration emphasizes that this agreement reflects a strategic and firm approach to trade with China, aimed at correcting long-standing imbalances. Unlike previous policy efforts, President Trump’s stance has focused on firm reciprocal measures to counter what are described as unfair trade practices.
Addressing the Fentanyl Crisis
Beyond trade, both nations have also committed to stepping up efforts to address the fentanyl crisis. The United States and China will take aggressive action to curb the flow of fentanyl and chemical precursors originating from China that are used by illicit drug manufacturers in North America.
Next Steps: Ongoing Dialogue and Economic Cooperation
Both countries have agreed to establish a mechanism to continue discussions on trade and economic relations. The announcement comes against the backdrop of a significant U.S. trade deficit with China – $295.4 billion in 2024, the largest with any trade partner.
If your business may be affected by these changes or if you're unsure what this means for your situation, feel free to reach out. We’re always open to hearing what challenges you're facing, so we can explore the right approach together, carefully and in line with your needs.