In a major break from months of escalating trade tensions, the United States and China announced a significant reduction in reciprocal tariffs yesterday. The joint statement issued on May 12, 2025, revealed that both countries will slash tariffs from 125% to 10% for a 90-day period starting no later than May 14, 2025.
After months of trade hostilities, US and China slash tariffs from 125% to 10% for 90 days beginning May 14
The 10% rate, described as the “minimum baseline tariff,” will replace the steep duties imposed since April 2, 2025. This marks a dramatic shift from the trade war that began in early April, when the US first applied a 34% reciprocal tariff on Chinese goods, which quickly escalated to 125% by April 9.
China matched these increases step by step, leading to peak tariffs of 145% in some cases when added to existing duties. The new agreement suspends 24% of the most recent tariff rate while maintaining a 10% ad valorem rate on both sides.
The tariff cut doesn’t affect duties imposed before April 2, 2025. Section 301 and Section 232 tariffs from earlier trade disputes remain in place. The reduction does extend to goods from Hong Kong and Macau.
Both governments say the pause aims to create space for productive negotiations on deeper trade issues. U.S. Treasury Secretary Scott Bessent confirmed the agreement during meetings in Geneva this weekend. The temporary nature of the deal puts pressure on negotiators to make progress during the 90-day window, which will end in mid-August 2025.
If talks fail, tariffs could jump back up, though likely to the 34% level rather than the full 125% peak. As part of the agreement, China will also suspend non-tariff countermeasures it put in place since April 2.
Markets have responded positively to the news, seeing it as a sign of potential de-escalation. Exporters and manufacturers expect immediate relief during the reprieve period. This is particularly significant for the LPG industry, as the previous tariff rate would have severely impacted global shipping routes and threatened the supply chains that support China’s expanding petrochemical sector.
The temporary reduction represents a calculated gamble by both sides that three months of lower tariffs will generate enough goodwill and economic benefit to resolve the underlying trade disputes. The temporary measures establish a mechanism for ongoing economic discussions between the two global powers.
