Higher Tariffs Here to Stay Despite Trade War De-Escalation?

In an unexpected de-escalation of the trade war between the United States and China, additional tariffs announced by both countries in 2025 on each others' imports are set to drop significantly Wednesday, initially for a 90-day pause. Additional U.S. tariffs on Chinese goods, running as high as 145 percent most recently, will be decreased down to 30 percent, while 2025 Chinese tariffs on U.S. imports would be lowered from currently 125 percent to just 10 percent. Both sides had negotiated in Geneva, Switzerland, on the weekend. The Trump administration also announced talks between the U.S. president and Chinese leader Xi Jinping to follow. A mechanism for continued trade and economic discussion between the two countries was also set up.

After a chaotic couple of months for the world economy and financial markets, the deal represents a much-needed reprise. However, the status quo for at least the coming 90 days - namely 30 percent additional tariffs on most Chinese imports to the U.S. and 10 percent additional duties on U.S. imports to China - still represents a majorly altered global trade reality. Astronomical tariffs that both countries slapped on each other as the 2025 trade war heated up are now distracting from the fact that even the new baseline tariffs are high compared to the not-so-distant past. The same is true for the 10 percent baseline, so-called reciprocal tariff the Trump administration keeps charging almost all trade partners that want to sell to the U.S. Its significance was likewise overshadowed by the introduction and same-day pause on April 9 of much higher country-specific tariffs that spanned the globe.