United States And China reduce the mutual duties of the 110% For the next 90 days starting from 14 May 2025. This is the agreement – communicated on Monday 12 May in a common declaration – obtained in Geneva, Switzerland, after a long negotiation that involved the two superpowers.
From the massive reintroduction of duties underTrump Administrationcommercial balances between United States And China They have undergone significant changes, with tangible repercussions on the economies of both commercial powers. The duties imposed by Washington – in particular those up to 145% on certain Chinese products – contributed to Cool Chinese growth in the manufacturing sector and to generate a Worsening of the US commercial deficit with Beijing. Just think that in 2024, the commercial deficit of the United States with China has risen to 295.4 billion dollarsgrowing up of the 5.8% compared to the previous year. In the same period, American exports to China decreased, while Chinese imports to the United States increased, a sign that the duties have not reversed the direction of the commercial flow as promised. On the internal front, the United States recorded one in the first quarter of 2025 GDP contraction of 0.3%: the worst performance since 2022.
This slowdown has been aggravated by a surge in imports, favored by early purchases by companies to avoid further increases, and from cuts to public spending. In China, meanwhile, the manufacturing industry has shown evident signs of contraction, with the index SME (Purchasing Managers’ Index), which went down to 49well below the threshold indicating a period of expansion. The duties have had concrete but complex effects: they weakened the Chinese demand by the United States without however rebalancing trade, and have introduced new fragility both in the American and Chinese economy.
The effect of duties on the USA and China
In detail, the data on trade between the United States and China in 2024 show a clear photograph: the overall value of the exchanges of goods between the two countries has reached 582.4 billion dollars. Of these, the US exports to China represented only 143.5 billiondown by the 2.9% compared to 2023, while Chinese imports have increased to 438.9 billionrecording a growth of 2.8%. This further expanded the American commercial deficit, confirming that the declared objective of rebalancing through the duties has at least disregarded so far.
On the Chinese front, the impact focused on the production sector. The index SME of the manufacturing sector, an indicator that measures the level of economic activity perceived by the managers of the purchases of industrial companies, in April it fell to 49the lowest value from December 2023. And consider that for this index a value less than 50 indicates a contraction in the sector. This drop has been attributed to «abrupt changes in the external environment and other factors», To borrow what has been said by Zhao qinghesenior statistical at theNBS (National Bureau of Statistics). Chinese producers responded to this pressure with cuts in the production and cancellations of orders, reporting a slowdown in exports which has particularly affected small and medium -sized enterprises.
Even the index of new orders to exports has fallen to 44.7the lowest point from the post-Pandemic era at the end of 2022
On the American side, although the declared intention of the Trump administration was to protect the internal industry and reduce dependence from China, the most recent numbers tell a different story. The GDP (Gross domestic product) of the United States recorded one in the first quarter of 2025 contraction of 0.3%well below expectations and on a strong decline with respect to the +2.4% recorded in the previous quarter. Economists attribute this worsening to three main factors: a sudden increase in imports, a reduction in public spending and a slowdown in consumer expenditure.
The importsin particular, have increased dramatically passing from -1.9% al 41.3%. This happened in part because many US companies decided to anticipate purchases to avoid the increases due to future duties, creating an effect of “inflated stocks” that has temporarily altered commercial flows.
There Consumer expenditure – which represents about the 70% of the US GDP – is slowed down to1.8%the weakest figure since mid 2023, reporting a growing prudence from families. Also the public spending he played a negative role, with a decrease in the 5.1% which further slowed down growth.
Despite these signals, some parts of the US economy have shown a certain resilience. The private investments of companies have increased by 9.8%in part to equip themselves in view of possible increases in costs. Another indicator, the Final sales to national private buyersrecorded a +3%indicating that the internal question remains solid.
In Chinathe government replied with targeted support measures, such as the Improvement of access to credit for companies and the introduction of consumption incentivesbut has avoided large -scale stimuli so far. The Chinese authorities, while showing firmness, recognize the need for Further interventions to compensate for the difficulties of the Export-oriented sector.
US and China will suspend part of the duties for 90 days
Meanwhile, the United States and China have announced one mutual suspensionFor 90 daysOf part of the punitive customs duties imposed on their respective goods. The agreement, reached a Geneva and formalized in a joint press release, provides that by May 14th The United States reduce the 24% The additional “A -value” rate on Chinese assets (including those from Hong Kong and Macao), while maintaining a share of the 10%.
There China it will acknowledge a mirror cut on US assets “suspending 24 percentage points of this rate (additional “ad valuem”, editor’s note) For an initial 90 -day period and while maintaining the remaining additional value of value of 10% on these items». Both parties will also remove the most recent rates introduced in the first days of April 2025. According to the US secretary at the Treasury, Scott Bessentthe agreement is equivalent to one total reduction of 115% on mutual duties: The United States they will bring duties from 145% to 30% and China from 125% to 10%. In addition, Beijing has committed himself to suspending any non -tariff countermeasures adopted after April 2, 2025.
