The United States and China reach a historic agreement. They will hold on advancing stepped-up tariff increases on each other’s imports for an additional 90 days. This announcement is particularly noteworthy given the backdrop of worsening trade relations between the world’s two largest economies. That deal was always going to be critical. It played an important role in avoiding a punishing tariff hike that would have devastated American workers and consumers alike.
Due to the size of the trade relationship, China is currently America’s second-largest source of imports. This incredibly complex bilateral state-to-state trade relationship strongly mattered. Currently, the tariffs that the US levies range in no less than 10% on imports from China. A planned increase was set to raise these tariffs from 30% to a staggering 64% at 12:01 AM ET, which would have placed severe financial strain on both the US economy and everyday consumers.
The unexpected trade war ignited a barrage of “retaliatory” tariffs. The US waged this tariff war against many of its trading partners, with the most prominent being China. As a result, the US’s overall tariff rate has increased to a rate not seen since before the Great Depression. American companies that rely on Chinese supply chains were alarmed by the … A peril for consumers is the potential for more expensive everyday items.
Without the new deal, the US-China trade relationship was previously on the brink of an effective blockade. This would do nothing but increase animosity between the two countries. The increasing tariffs on Chinese imports threatened the American business community. This step threatened to anger China in return, possibly creating a broader trade war between the United States and China.
The US and China were under a tight deadline to reach this deal before the scheduled January tariff increases went into effect. So far, both nations have agreed to a 90-day pause. This ruling helps encourage predictability in their trading relationship and prevents the parties from going back to potentially punitive, ultra-high tariff rates. The moratorium allows for both sides to come to the bargaining table to hash out more favorable conditions. They can and should address some of the underlying factors driving the decades-long trade dispute.