• The U.S. and China agree to reduce tariffs by 115% from April peaks, but a 10% baseline tariff remains during a 90-day negotiation window.
  • China’s delayed removal of certain non-tariff countermeasures introduces uncertainty for businesses reliant on stable trade relations.
  • The deal reflects a temporary détente, with both sides retaining leverage for future negotiations amid lingering mistrust.

A Fragile Truce in Trade Tensions

The U.S. and China have taken tentative steps to de-escalate their latest trade spat, agreeing to roll back a significant portion of the tariffs imposed in early April 2025. While the move signals a return to negotiations, China’s sluggish pace in lifting some retaliatory measures has left businesses wary. The agreement, finalized last week, maintains a 10% baseline tariff on key imports from both nations, serving as a safeguard during the 90-day negotiation period.

According to sources familiar with the talks, China has been slower than expected in dismantling non-tariff barriers, such as licensing delays and regulatory hurdles, which were introduced as countermeasures to U.S. actions. “There’s progress, but the asymmetry in implementation is notable,” one trade advisor close to the discussions said, speaking on condition of anonymity.

The partial rollback comes as both economies grapple with inflationary pressures and supply chain disruptions. While U.S. officials have framed the deal as a win for domestic industries, analysts caution that the lingering 10% tariff—and China’s hesitance to fully unwind its retaliatory toolkit—could prolong uncertainty. “This isn’t a resolution; it’s a pause,” said a senior economist at a global trade consultancy. “Businesses planning for the long term still face a foggy outlook.”

Political Leverage and Market Reactions

The agreement allows both governments to claim a tactical victory. The Biden administration has emphasized the protection of critical U.S. industries, while China’s leadership has avoided conceding too much ground ahead of further talks. Market reactions have been cautiously optimistic, with equities in trade-sensitive sectors edging higher, though volatility remains elevated.

Industry groups have welcomed the tariff reductions but are pressing for more clarity. “The 90-day window is a start, but businesses need to know whether this is a path to stability or just another temporary reprieve,” said a spokesperson for a major manufacturing coalition.

If negotiations stall, tariffs could snap back as early as mid-August, reigniting trade tensions. For now, the focus shifts to Beijing’s next moves—and whether it will accelerate the removal of its remaining countermeasures.