Do we observe early signs of US and China negotiating lower reciprocal tariffs?

As of early May 2025, there are early signs of U.S.-China negotiations aimed at reducing reciprocal tariffs, though substantial progress remains uncertain.

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Key Developments

• Tariff Adjustments: President Trump has indicated a willingness to reduce tariffs on Chinese imports, stating they would "come down substantially, but it won't be zero." However, the U.S. has not outlined specific steps China must take to achieve tariff reductions.

• China's Position: China has expressed openness to dialogue, urging the U.S. to meet "halfway" and resolve differences through consultation . Despite this, China has not agreed to roll back retaliatory tariffs unless the U.S. first eliminates its own.

• Ongoing Tensions: Both nations continue to impose high tariffs on each other's goods. For instance, the U.S. has implemented a 145% tariff on Chinese imports, while China has imposed an 84% tariff on U.S. goods.

Economic Impact

The prolonged trade tensions have led to significant economic consequences:

• Decline in Trade Volumes: Cargo company Expeditors reported a 35.1% drop in container traffic from China to the U.S. in early May, indicating reduced trade activity.

• Market Volatility: Global markets have experienced renewed volatility due to the ongoing trade tensions, affecting investor confidence.

  
  

Outlook

While both the U.S. and China have expressed a willingness to negotiate, substantial progress in reducing tariffs will require addressing deep-rooted structural economic differences. The path to a comprehensive trade agreement remains complex and uncertain.