Tariff reduction agreement reached: U.S. and China find common ground on trade tariffs
In a significant development, U.S. President Donald Trump has deferred the introduction of new tariffs in U.S.-China trade by decree. This decision follows a 90-day extension, which aims to provide economic stability and more time for negotiations.
The current tariff on goods exported from China to the U.S. remains at 30 percent. This consists of a 10 percent reciprocal tariff and an additional 20 percent tariff under the International Emergency Economic Powers Act (IEEPA). The suspension of these tariffs on U.S.-China trade will last until November 10, 2025.
Similarly, China has maintained retaliatory tariffs at current levels during this truce period. Without this extension, tariffs could have soared to about 80 percent or even higher, significantly disrupting trade.
Trump wrote on Truth Social that "all other elements of the agreement remain unchanged." The deferment of tariffs is likely to bring relief to investors at the stock exchange, as indicated by the positive start of the DAX and the Dow Jones future on Wall Street.
It's important to note that the 10 percent tariff is the baseline reciprocal tariff rate on Chinese goods. This together with the existing 20 percent fentanyl-related tariff totals 30 percent on imports from China. Some existing tariff exemptions remain in place, such as for steel, aluminum, and automotive goods that already face other rates.
The DER AKTIONÄR Sentiment Indicator (DASI) shows that market sentiment remains dominated by fear. However, this temporary truce in the U.S.-China trade dispute could potentially signal a step towards resolving the ongoing tension.
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The deferment of tariffs in U.S.-China trade by President Trump, as indicated by the suspension until November 10, 2025, could impact the finance industry and business, particularly the general-news sector, given the broad implications of this trade disputes resolution on overall economic stability. The 10 percent reciprocal tariff, being a significant component of the tariffs on Chinese goods, could affect investment decisions in the industry. Moreover, the potential resolution of the ongoing tension, signaled by this truce, may influence both politics and business, as market sentiment and stock exchanges across the globe respond to developments in the U.S.-China trade arena.
