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2w ago

U.S.-China Tariff Truce Eases Trade Tensions but Leaves Core Issues Unresolved

The 90-day suspension reduces tariffs significantly, but analysts warn of unresolved disputes and the risk of re-escalation.

A drone image shows a farm worker operating a combine harvester during the soybean harvest season in Brazil's southernmost state, on a farm in Lagoa dos Tres Cantos, Rio Grande do Sul state, Brazil, April 1, 2025. REUTERS/Diego Vara./File Photo
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Shipping containers are stacked at the Port of Oakland in Oakland, California
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Overview

  • The U.S. has reduced tariffs on Chinese goods from 145% to 30%, while China has lowered its duties from 125% to 10% for a 90-day period.
  • The agreement lacks enforcement mechanisms and fails to address key issues like intellectual property protections and advanced technology export controls.
  • Markets initially rallied on the news, with the S&P 500 gaining 3% on Monday and 0.7% on Tuesday, but analysts caution that optimism may be premature.
  • Federal Reserve Vice Chair Philip Jefferson highlighted that the remaining tariffs could drive near-term inflation, complicating monetary policy decisions.
  • Manufacturers in the U.S. are stockpiling key inputs to mitigate future risks, while experts warn the truce could unravel if talks stall by early August.