• China is offering a "massive investment package" in exchange for the US rolling back restrictions on Chinese investment and trade.
  • The US and China agreed on May 12, 2025, to temporarily suspend or reduce recently enacted tariffs for 90 days.
  • The deal provides immediate cost relief but leaves baseline tariffs and long-term trade tensions unresolved.

China is pressuring the Trump administration to roll back US restrictions on Chinese investment and trade, offering the incentive of a "massive investment package" and specifically seeking lower tariffs on goods produced by future Chinese-owned factories in the US. The push comes as the two economic giants reached a fragile, short-term truce on recent tariff escalations.

In the latest development, the US and China agreed on May 12, 2025, to temporarily suspend or reduce recently enacted tariffs for 90 days. This provides immediate cost relief for US importers sourcing from China after tariffs on both sides had soared in April 2025—US rates peaked above 140% and China’s above 125% for targeted imports. The US suspension affects 24% in new tariffs, but baseline and earlier Section 232/301 tariffs remain in place.

According to people familiar with the negotiations, China's demands include lowering tariffs on inputs used by any Chinese factories built in the US as a result of the proposed investment package. The deal also includes some relaxation of Chinese export restrictions on critical minerals, which Beijing had implemented as retaliatory measures.

"This is a classic case of China using market access as leverage," said one trade policy analyst who asked not to be named due to the sensitivity of the talks. "They're dangling the prospect of capital inflows to achieve specific policy concessions."

The temporary tariff rollback should help ease inflationary pressure in the US and allow companies to plan their sourcing strategies with slightly more certainty. However, supply chains remain fragile, and persistent trade unpredictability continues to dampen investment confidence across global markets.

Efforts to reach officials at the US Trade Representative's office for comment were unsuccessful late Tuesday. A spokesperson for China's Ministry of Commerce declined to comment on the specific investment package but confirmed both sides were "working to implement the temporary tariff suspension."

The 90-day tariff suspension is set to expire on July 9, 2025, with no guarantee of further extension. Trade experts note that unless a long-term solution is reached, renewed escalation remains likely, particularly as both sides have reserved major tariffs and non-tariff measures.

Correction: An earlier version of this article misstated the percentage of new tariffs affected by the suspension. The correct figure is 24%.