The Trump administration and China have come to an agreement to temporarily scale back tariffs as both nations take cautious steps towards negotiating an economic ceasefire. This development comes after more than a month of escalating tensions in a trade war that has posed significant threats to the global economy.
On Monday, the White House announced that under this new agreement, both the United States and China will lower tariffs by 115 percent while maintaining an additional 10-percent tariff. Furthermore, other U.S. measures will remain in place during this period. According to a White House fact sheet, “China will remove the retaliatory tariffs it announced since April 4, 2025, and will also suspend or remove the non-tariff countermeasures taken against the United States since April 2, 2025.”
As part of the agreement, China will suspend its initial 34-percent tariff on U.S. goods, which was introduced on April 4, 2025, for a duration of 90 days. However, a 10-percent tariff will remain in effect during this pause. On the other hand, the U.S. will lower its tariff rate on Chinese goods from 145 percent to 30 percent, while China will reduce its rates from 125 percent to 10 percent. This deal also indicates that China will temporarily lift restrictions on the export of rare earth minerals and other crucial raw materials to the United States.
President Trump has consistently referred to the tariffs as a vital element for the American economy. Over the weekend, he expressed on Truth Social that, “IN JUST THREE MONTHS, TRILLIONS OF DOLLARS (and therefore, record numbers of JOBS!) HAVE BEEN POURING INTO THE USA. THIS IS BECAUSE OF MY TARIFF POLICY.” Last week, Trump claimed that a decline in ships entering U.S. ports was beneficial, as it suggested reduced financial losses.
Despite these assertions, many consumers are already experiencing the negative effects of rising prices. The economy contracted in the first quarter of 2025, which could potentially lead the U.S. into an official recession if the situation does not improve. Major financial institutions continue to warn that the ongoing trade war could result in higher inflation, increased unemployment, and overall economic instability.
In a recent statement, Trump suggested that it was China that had backed down due to economic pressure, claiming, “The relationship is very good. We aren’t looking to hurt China. China was being hurt badly and closing up factories and having a lot of unrest.” In contrast, Chinese state media boasted about their “firm countermeasures and resolute stance” in response to U.S. tariffs.
U.S. Trade Representative Ambassador Jamieson Greer commented that the two nations reached an agreement “quickly,” indicating that the differences in their positions might not have been as significant as initially perceived. He emphasized the need to remember that the U.S. has a substantial $1.2 trillion trade deficit, which prompted the President to declare a national emergency and impose tariffs.
While the agreement provides a temporary reprieve, the real national emergency may be the potential economic fallout resulting from Trump’s aggressive tariff policies. Last week, the Federal Reserve dealt a significant blow to the President’s narrative by opting not to lower interest rates, warning that sustained tariff increases would likely lead to inflation, slowed economic growth, and higher unemployment.
After Trump’s “Liberation Day” announcement in April, which introduced global tariffs and trade restrictions that rattled international markets, he had previously paused enforcement to allow nations time to negotiate. However, instead of easing tariffs on China, he escalated them to over 100 percent, ultimately reaching 145 percent.
As of now, no formal trade agreements have been established, and the risk of economic fallout remains high. The Chinese government has spent considerable time denying U.S. claims of productive negotiations, insisting they would not engage unless Trump agreed to roll back punitive tariffs. In light of deteriorating economic indicators and diminishing leverage, it appears that the Trump administration has finally yielded.
As the U.S. and China embark on the arduous journey towards reconciliation, the most significant hurdle remains the American president's ego and his willingness to prioritize personal interests over the welfare of his own population.
