• The US has agreed to cap replacement tariffs on Chinese goods at 20%, according to Beijing, with current tariffs at 12.5%.
  • China warns it will retaliate against any new US measures and urges Washington to remove unilateral tariffs.
  • A separate US probe into China's manufacturing sector could lead to additional duties, escalating trade tensions.

Tariff Ceiling Established

The US has agreed to cap replacement tariffs on Chinese goods at 20%, China said Friday, citing progress in trade talks. Current tariffs stand at 12.5%, leaving limited room for further increases under the new ceiling. Beijing hailed the cap as a step toward de-escalation but warned it would respond firmly to any new US measures.

"We urge the US to remove unilateral tariffs and continue negotiations in good faith," a Chinese commerce ministry spokesperson said, speaking on condition of anonymity. The US Trade Representative's office did not immediately respond to a request for comment.

Retaliation Threat Looms

Beijing's warning comes as a separate US probe into China's manufacturing sector—focusing on alleged subsidies and overcapacity—could trigger additional duties. Analysts say the investigation, launched under Section 301, may target industries like semiconductors and electric vehicles, broadening the trade dispute.

"If the US imposes new tariffs, China will take necessary countermeasures," the spokesperson said, without specifying details. Past retaliatory actions have included tariffs on US agricultural and energy exports.

Market Implications

Investors are closely watching the talks, with global supply chains and inflation at stake. The 20% cap provides some certainty for businesses, but the separate probe introduces fresh uncertainty. "The ceiling is a positive signal, but the probe could offset that," said a trade analyst who declined to be named.

*Correction: An earlier version of this article misstated the current tariff level. It is 12.5%, not 10%.