President Donald Trump and Xi Jinping shake hands as they leave after their talks in Busan, South Korea, in autumn. (Andrew Harnick/Getty Images)
key takeaways:
- China said that during trade talks on July 27, the US committed to limit substitution tariffs on Chinese goods to 20% and the current tariff to 12.5%.
- The disclosure indicated Washington has 7.5 percentage points left for further increases, while the tariff pause has helped ease already rising trade tensions.
- China said it would assess future US actions and take retaliatory measures, while a separate US investigation could lead to additional charges.
China said the US has committed to limiting substitution tariffs on Chinese goods to 20% after President Donald Trump imposed new tariffs, capping further increases.
The Commerce Ministry first disclosed the commitment on July 27, saying Washington had made it during bilateral trade talks. By pointing out that the current replacement tariff is 12.5%, Beijing indicated that the US has room for an additional increase of 7.5 percentage points before reaching the stated limit.
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The Trump administration’s new tariffs come as the US president rebuilds a protectionist wall after the Supreme Court struck down his initial tariffs. These tariffs are in line with tariff levels proposed last month on 60 trading partners, which it said were making inadequate efforts to address forced labour. The new rates replace global duties of 10% that were set to expire on July 24.
The US has previously launched a separate investigation citing alleged overcapacity issues in China’s manufacturing sector. The outcome of that investigation could lead to further increases in the levy.
For its part, China’s countermeasures against US fentanyl and the first round of reciprocal tariffs will remain effective, the statement said. The ministry also criticized Washington for imposing the tariffs over forced labor concerns, with Beijing saying it has established a comprehensive legal framework to prevent and combat the practice.
The US has previously launched a separate investigation citing alleged overcapacity issues in China’s manufacturing sector. (Kenna Betancur/Bloomberg)
“We will continue to closely monitor and fully assess subsequent US measures and reserve the right to take all necessary measures,” the ministry said. It urged the US to correct its “wrong practices”, remove unilateral tariffs and resolve differences through dialogue.
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China said the US has indicated that the levy will replace duties imposed under the International Emergency Economic Powers Act and Section 122 import surcharges.
The immediate absence of countermeasures suggests tensions are continuing to ease and that’s largely thanks to a truce in the tariff fight, which at one point last year saw U.S. levies soar as high as 145%. The one-year agreement — which was unveiled at a summit between Trump and President Xi Jinping in South Korea and was set to expire in November unless extended — suspends some tariffs, rare earth restrictions and investigations into China’s shipbuilders.
Under the terms of an agreement reached in Malaysia last October, the effective rate on sugar imports into the US reached about 30% and was later reduced after the Supreme Court struck down some of the tariffs. In May, China indicated it would accept some increases in U.S. tariffs to levels negotiated last year and would continue talks to extend the trade truce.
