US, China agree to slash tariffs by 115% during 90-day pause

S&P Global

The US and China will cut reciprocal tariffs by 115% on most of the goods during a 90-day pause agreed by the two countries, effective from May 14, the Chinese government said May 12.

The US will reduce tariffs on most Chinese goods to 30% from 145%, while China will lower its levies on American imports to 10% from 125%, according to a statement released by the Chinese government.

China said it will adopt all necessary administrative measures to suspend or remove non-tariff countermeasures taken against the US since April 2.

In April, China raised its tariffs on US goods to 124%, describing this as the final hike and stating that markets can no longer accept US goods exported to China at these elevated tariff levels. Beijing’s decision followed the US’s imposition of additional tariffs on Chinese goods, raising them to 145% on April 10.

So far, China’s steel demand and soybean imports are expected to benefit from the tariff rolldown.

Metals

After the announcement, US tariffs on steel, aluminum and auto exports remained unchanged, as they were not included in the reciprocal tariffs.

Chinese steel products will still be subject to a tariff hike of 45%, imposed so far in 2025. With the previous 25% import tariff on Chinese steel, which was imposed in 2018, the total tariff on steel imports from China by the US is 70%.

As the steel exports to the US accounted for only 0.8% of China’s total steel exports, a 70% tariff on steel is not expected to have a direct impact on China’s export markets, said some Chinese steel traders.

Some sources said the US tariff hikes, even though now being reduced from 145% to 30%, could still weaken China’s manufactured goods exports in a long run.

But in the short term, as markets remained concerned around a potential trade flare-up between China and the US, the temporary cuts may lead to another surge of manufactured good’s exports, which will be beneficial to China’s steel demand.

According to market sources, Chinese aluminum exports are expected to remain elevated in the coming months, as the re-export rush continues.

Meanwhile, Chinese imports of copper scrap from the US might gradually resume if tariffs on US goods are reduced to 10%, they said.

Solar

For solar PV products, the temporary truce has a limited impact as the US’ solar-specific tariffs remained elevated and made China’s direct and indirect exports to the US market economically unviable.

China’s direct exports to the US have already become very limited, as significant tariffs have been imposed in the past decade. In recent years, China has leveraged four intermediate manufacturing hubs in Southeast Asia, namely Cambodia, Malaysia, Thailand, and Vietnam, to process semi-finished solar products from China and export them to the US market indirectly.

On April 21, the US Commerce Department finalized antidumping and countervailing duty rates on solar cells from the four Southeast Asian countries. The decision imposed antidumping rates up to 125.37% for Cambodia, 81.24% for Malaysia, 202.90% for Thailand, and 271.28% for Vietnam. Besides, countervailing duties reached up to 3,403.96% for Cambodia, 168.80% for Malaysia, 799.55% for Thailand, and 542.64% for Vietnam.

“If ratified by the US International Trade Commission (ITC) in June 2025, exports of solar products to the US from the region could halt entirely,” Vince Heo, Director for Gas, Power, and Climate Solutions at S&P Global Commodity Insights, said.

Soybeans

After China’s easing of retaliatory tariffs on US goods, China’s effective duty rate on US soybeans is set to reach 23%.

In 2024, soybeans topped the US agricultural exports, with 27 million mt valued at $12.73 billion, accounting for 52% of total soybean exports, according to the US Department of Agriculture.

China is the world’s largest buyer of soybeans, importing over 100 million mt in 2024. China is also the US’s biggest buyer of soybeans.

During the trade tensions in 2018, US soybean exports to China decreased significantly, dropping to a market share of about 18% from 60% a year earlier, according to the American Soybean Association.

At the time of publishing, July soybean futures on the Chicago Mercantile Exchange have risen 13.2 cents per bushel from May 9 settlement, while July corn futures have traded firmer by 1 cent per bushel, up from 449.75 cents per bushel.