Latest US Tariffs Update for China

As of early August 2025, the trade relationship between the United States and China is in a state of precarious stability, with both sides having stepped back from a major escalation but with no long-term resolution in sight. The situation is distinct from the general US tariff policy because China was exempted from the August 1 deadline that applied to other countries.

Current Tariffs and Agreements

• Tariff Pause Extended: The most significant recent development is that the US and China have agreed to a 90-day extension of their current tariff "truce." This pause, which was set to expire on August 12, will allow negotiators to continue working on a comprehensive deal. The extension came after two days of trade talks in Stockholm.

• Current Tariff Rates: During this truce period, the following tariffs remain in place:
  US Tariffs on Chinese Goods: A 30% tariff is applied on most Chinese imports. This is a significant reduction from the initial, much higher tariffs that were threatened in April 2025.
  Chinese Tariffs on US Goods: China maintains a 10% tariff on American products.

• Deals and Agreements:
  Rare Earth Minerals: A key agreement was reached in late June 2025 where China committed to expediting rare-earth shipments to the US. In exchange, the US agreed to rescind some technology and visa restrictions. This deal is crucial for US industries that rely on these critical minerals for products like EVs, defense technology, and semiconductors.
  "De Minimis" Loophole: The Trump administration has taken steps to close the "de minimis" loophole, which previously allowed goods under $800 to enter the US duty-free. This move is seen as directly targeting Chinese e-commerce companies and is expected to have a significant impact on their business model in the US.

• Pending Issues: Despite the pause, numerous contentious issues remain, including:
  China's non-market economic policies.
  Intellectual property protection.
  Digital trade and technology transfers.
  China's exports of products linked to fentanyl.
  China's significant purchases of Russian oil and military equipment. The US has signaled that China could face high tariffs if it continues these purchases, similar to the penalty imposed on India.

Impact on Companies

• US Companies Operating in China: A survey by the US-China Business Council (USCBC) found that US companies have cut investments in China to record lows. Only 48% of firms plan to invest in China this year, down from 80% in 2024. The uncertainty from "on-again, off-again" talks has shaken business confidence and disrupted investment planning. While many US firms remain profitable in China, they are reassessing their supply chains and scaling back new investments.

• US Exporters: Industries like agriculture, which were previously hit by Chinese retaliatory tariffs, continue to face challenges. For instance, China halted significant imports of US pork in April 2025. However, the recent tariff reductions and agreements offer some relief, as does China's recent pledge to help companies impacted by the tariffs. The Boeing company has seen some movement with China resuming deliveries as part of the trade talks.

• Chinese Exporters: Chinese companies face ongoing uncertainty, with a potential return to much higher tariffs if a long-term deal is not reached. The closure of the "de minimis" loophole is a significant new threat, particularly for companies in the e-commerce sector. China's government has pledged to support companies affected by the US tariffs.

• Third-Party Companies: Companies in countries like Vietnam, India, and Mexico are being impacted by the US-China trade dynamic. As US companies seek to diversify their supply chains away from China, these countries are both gaining and facing new challenges. The US has recently imposed tariffs on India, partly in response to its trade and security relationships with countries like Russia. The US also has a new "transshipment" rule which imposes a 40% tariff on goods that are found to have been mislabeled to evade duties, a measure that could affect any company attempting to bypass US tariffs on Chinese goods by shipping them through another country.