US-China trade

The Economist reports on China’s strangely good tariff deal, which also included reducing tariffs on ‘de minimis’ parcels to as low as 30%, per Reuters. Philip Luck of CSIS presents his understanding of the temporary de-escalation of the US-China Trade War. Separately, Trump has scrapped a Biden-era AI chips rule restricting sales of the semiconductors abroad, writes the Wall Street Journal. The Hinrich Foundation’s Deborah Elms unpacks the 90-day reprieve and the big questions it demands.

Mentioned publications

America has given China a strangely good tariff deal – The Economist, May 12, 2025
The US and China agreed to a 90-day tariff pause, cutting reciprocal duties from 125% to 10% and halting some retaliatory measures. While this eases recent tensions, earlier tariffs remain, keeping average rates elevated. Lasting resolution remains uncertain, with future talks hinging on China increasing purchases of US goods and addressing fentanyl-related concerns.
US slashes 'de minimis' tariff on small China parcels to as low as 30% – Reuters, May 14, 2025
The US has reduced tariffs on low-value commercial shipments from China to 30%, and on postal shipments to 54% or US$100 per package. The de minimis rule is blamed for driving a surge in cheap imports and smuggling.
Understanding the Temporary De-Escalation of the U.S.-China Trade War – Philip Luck, Center for Strategic and International Studies, May 13, 2025
The US and China have agreed to a mutual tariff pause, easing rates and lifting some export restrictions. While this move may reduce inflation and support investment, it comes after weeks of damaging trade shocks that disrupted supply chains, weakened credibility, and strained alliances. The temporary rollback offers relief but underscores the long-term risks of unpredictable and threat-based trade policy.
U.S. Scraps ‘AI Diffusion’ Rule in Revamp of Biden-Era Chip Curbs – Sherry Qin, The Wall Street Journal, May 14, 2025
The US has scrapped the AI Diffusion Rule, a move opposed by tech firms like Nvidia who argued it stifled innovation and hurt diplomatic ties. The Trump administration now aims to promote American AI technology among trusted partners while restricting access for adversaries. The policy shift benefits countries like Saudi Arabia as well as US AI players, but has limited impact on China’s chipmakers.
A major U-turn on US-China tariffs, but questions remain – Debrorah Elms, Hinrich Foundation, May 13, 2025
A dramatic U-turn on tariffs, engineered over a furious weekend of negotiations between the US and China, may appear to be a return to the status quo. It is not. Instead, it illustrates the consequences of rapid, unanticipated policy shifts with real economic consequences. This 90-day pause on the highest levels of tariffs imposed in history provides an opportunity to reconsider the trade agenda between the US and China, but the window is too limited and the agenda is long.