The United States and China have reached a 90-day trade agreement, marking a significant easing of tariffs between the two nations. The deal, brokered by President Donald Trump, aims to reduce China’s tariffs and eliminate retaliation, while retaining a US baseline tariff on China.
### Key Terms of the Agreement
– *Tariff Reductions*: Both countries will lower tariffs by 115%, with the US retaining a 10% tariff on Chinese goods and China suspending its initial 34% tariff on US goods for 90 days.
– *Non-Tariff Countermeasures*:
China will remove its non-tariff countermeasures taken against the US since April 2, 2025.
– *Bilateral Talks*:
The agreement establishes a mechanism for regular discussions on trade and economic matters, aiming to deepen economic cooperation and manage areas of disagreement.
### Challenges Ahead
Despite the agreement, deep-rooted tensions remain between the US and China. The two nations have competing ambitions for national security and global leadership in strategic industries, advanced technologies, and critical supply chains. Structural issues, such as China’s industrial policy, subsidies, and non-market practices, are unlikely to be resolved in the near term.
– *Trade Deficit*:
The US is desperate to rebalance its massive trade deficit with China, which stood at $295.4 billion in 2024. China, however, believes that two-way trade is largely balanced if services trade is considered.
– *Sector-Specific Tariffs*:
The agreement excludes sector-specific tariffs, such as those on steel and aluminum, and forthcoming taxes on pharmaceutical goods.
### Implications for Global Economic Stability
The US-China trade agreement has significant implications for global economic stability. As “America First” collides with a rising China, the world remains precarious. Selective decoupling in certain sectors remains a possibility, and the agreement’s success will depend on sustained political will, cooperative engagement, and significant compromise.
– *Global Leadership*: The US and China are vying for global leadership in strategic industries, advanced technologies, and critical supply chains.
– *Economic Cooperation*: The agreement’s consultative mechanism aims to promote continued communication and cooperation between the two nations.
