US, China agree to reduce tariffs on each other's goods from May 14

As per the agreement finalised after two-day deliberations in Geneva, Switzerland, the US has agreed to “modify the application of the additional ad valorem rate of duty on articles of China (including articles of the Hong Kong Special Administrative Region and the Macau Special Administrative Region) set forth in Executive Order 14257 of April 2, 2025, by suspending 24 percentage points of that rate for an initial period of 90 days, while retaining the  remaining ad valorem rate of 10 per cent on those articles pursuant to the terms of said Order.” The US has also agreed to “remove the modified additional ad valorem rates of duty on those articles imposed by Executive Order 14259 of April 8, 2025 and Executive Order 14266 of April 9, 2025.”

In other words, the 10 per cent duty announced by the US in February, followed by another 10 per cent in March stay intact, while the 34 per cent duty announced on April 2 has been reduced by 24 percentage points to 10 per cent. The duties announced subsequently have been removed. Thus, in effect, goods from China will attract at total duty of 30 per cent (instead of 145 per cent) over the existing duties when President Trump took office on January 20, 2025.

On the other hand, China has agreed to “modify accordingly the application of the additional ad valorem rate of duty on articles of the United States set forth in Announcement of the Customs Tariff Commission of the State Council No. 4 of 2025, by suspending 24 percentage points of that rate for an initial period of 90 days, while retaining the remaining additional ad valorem rate of 10 per cent on those articles, and removing the modified additional ad valorem rates of duty on those articles imposed by Announcement of the Customs Tariff Commission of the State Council No. 5 of 2025 and Announcement of the Customs Tariff Commission of the State Council No. 6 of 2025.” China will also “adopt all necessary administrative measures to suspend or remove the non-tariff countermeasures taken against the United States since April 2, 2025.”

Since China had not announced any retaliatory tariffs on the US in February and March, US goods now entering China would attract a 10 per cent duty over the existing rates as on January 20, 2025. All other duties have been removed.

In addition to reduction of tariffs, both China and the US have agreed to establish a mechanism to continue discussions about economic and trade relations. The representative from the Chinese side for these discussions will be He Lifeng, Vice Premier of the State Council, and the representatives from the US side will be Scott Bessent, Secretary of the Treasury, and Jamieson Greer, United States Trade Representative. “These discussions may be conducted alternately in China and the United States, or a third country upon agreement of the Parties. As required, the two sides may conduct working-level consultations on relevant economic and trade issues,” the joint statement issued by both countries said.

Fibre2Fashion News Desk (RKS)