USA / CHINA JOINT STATEMENT AND PROSPECTIVE IMPACT

This joint statement from the U.S. and China, released on May 12, 2025, represents a pivotal move in reducing recent trade tensions between the two nations. The key takeaways include:

1. Temporary Tariff Reductions

Both nations have agreed to suspend 24 % percentage points of their respective additional ad valorem duties for a 90-day period, retaining only a 10% tariff on targeted goods. This temporary measure provides a window for further negotiation.

• U.S. Action:

  • Suspension applies to tariffs from Executive Orders 14257, 14259, and 14266.

• China’s Action:

  • Suspension applies to tariffs from Announcement Nos. 4, 5, and 6 (2025).

  • Additional removal of non-tariff countermeasures imposed since April 2, 2025.

2. Ongoing Dialogue Framework

The two sides have agreed to institutionalize ongoing economic and trade talks:

• U.S. Representatives: Scott Bessent (Treasury Secretary) and Jamieson Greer (USTR).

• China’s Representative: Vice Premier He Lifeng.

• Meetings may be held in the U.S., China, or third countries, with working-level consultations as needed.

3. Tone and Intent

The language emphasizes mutual respect, sustainable engagement, and cooperation, signaling an intent to stabilize relations amid what has likely been an escalating trade dispute since at least early April 2025.

Industry-Specific Impacts

1. Technology

• Semiconductors, Electronics, and Cloud Services: U.S. tech firms that rely on exports to China (e.g., chipmakers like Intel, Nvidia) may benefit from eased tensions. Similarly, Chinese tech firms may regain access to U.S. components or services that were previously restricted.

• Reduced Risk of New Sanctions: The agreement suggests a temporary halt in new regulatory crackdowns or export controls.

  
  

2. Agriculture

• U.S. Farmers: Positive outlook for soybeans, pork, corn, and other major exports to China. Tariff suspensions could open the door for resumed or expanded purchases by China’s state buyers.

• Input Prices: Lower tariffs on U.S. agricultural machinery and chemicals could reduce costs for Chinese farmers.

  
  

3. Manufacturing and Consumer Goods

• Lower Input Costs: Manufacturers in both countries may see reduced input costs due to lower tariffs on raw materials and intermediate goods.

• Retailers and Consumers: Large U.S. importers (e.g., Walmart, Target) might avoid price hikes, and Chinese exporters could see stronger demand if tariffs remain low.

  
  

4. Automotive

• Bilateral Supply Chains: Carmakers with cross-border supply chains (e.g., Tesla, GM, Geely) benefit from a stable trade regime.

• EV Sector: Ongoing cooperation may ease tensions around EV battery materials and technology licensing.

Caveats

• Short-term Relief: The 90-day window is temporary. Markets may grow cautious as the deadline approaches if no long-term deal is reached.

• Structural Issues Unresolved: Core disputes (e.g., IP protection, state subsidies, market access) remain unaddressed, leaving room for renewed tensions.

• Non-Tariff Measures: While some non-tariff actions are being reversed, broader regulatory and investment restrictions are not covered in this agreement.

THANK YOU