On Monday, a commercial agreement between the United States and China reduced Tit rates per eye between the two largest economies in the world and caused an increase in the stock market.
The United States agreed to reduce tariffs to Chinese products from 145% to 30%, while China promised to reduce tariffs in US products from 125% to 10%. Low rates will remain in place for 90 days, while the two parties negotiate a broader commercial agreement.
Even so, the agreement seemed to leave unresolved key conflict points as the two countries work through a recently established mechanism for more discussions.
In a joint declaration, the United States and China promoted the agreement as evidence that both parties recognize the “importance of an economic and commercial relationship and mutually beneficial and mutually beneficial.”
This is what you should know about the new commercial framework:
Lower tariffs
The commercial agreement temporarily reduces the rates imposed by the United States and China after the announcement of Trump’s “release day” last month.
The previous set of very high tariffs had threatened with an increase in prices and a possible recession of the United States, experts told ABC News.
Jonathan Pingle, US chief economist at Swiss Investment Bank UBS, estimated that the reduction of US taxes on China would reduce the average rates of the United States from 24% to 14%.
In a statement to ABC News, Pingle described the agreement between the United States and China as a “cooling.”
The specific tariffs of the sector on cars, aluminum and steel remain in their place for Chinese products, Trump told journalists in the Oval office on Monday. Trump also said that China would be subject to tariffs that the White House plans to impose on pharmaceutical products.
The agreement retains a set of tariffs of 20% aimed at China on their role in the fentanyl trade, as well as a 10% tax promoted to imports from almost all countries.
A plan for new negotiations
The framework established a mechanism for negotiations between the United States and China, establishing countries for additional discussions during the 90 -day period of reduced rates.
Senior officials on both sides will participate in the conversations, the statement added.
The Secretary of the Treasury, Scott Besent and the United States Commerce Representative, Jamieson Greer, will represent the United States, while China will be represented by the vice president of the state council He Lifeng, an associate for a long time of Chinese President Xi Jinping.
Shang-Jin Wei, professor of finance and economy at Columbia University who studies the commercial relationship between the United States and China, described the negotiation mechanism as “significant.”
“It’s not an empty statement, there will be negotiations,” said Wei.
But, Wei added, the agreement reached on Monday is equivalent to a “temporary solution”, since the two parties participate in a challenging set of discussions in the coming months.
“There is a lot of uncertainty about what will happen in 90 days,” said Wei.
The Secretary of the Treasury, Scott Besent, attends a press conference after two days of discussions behind closed doors between the United States and China, in Geneva, Switzerland, on May 12, 2025.
Jean-Christophe Bott/EPA-EFE/Shuttersock
The conflict points remain unsolved
Speaking at the White House on Monday, Trump acknowledged that the verbal commitments made by both parties must be “wallpaper”, which means that the broad agreement has not yet been formalized through detailed agreements.
Trump has previously said that he would like to reduce an American commercial deficit of $ 300 billion with China, and retreat what he describes as non -tariff barriers to US trade. The framework announced on Monday did not detail the steps towards those efforts, said Wei.
The agreement also seemed to lack final resolution for a key conflict point focused on the access of the United States to important materials largely controlled by China.
China imposed export restrictions on some elements and magnets of rare earths that constitute critical supplies in some car products, energy and defense of the US.
For now, Chinese companies can still export to US clients, although Chinese companies must receive the approval of the Chinese government.
After the agreement, American buyers are expected to have an easier route for such approval, but restrictions are not expected Reuters reported.
Rare earths are vital for a variety of defense technologies, including F-35 combat aircraft, Tomahawk missiles and radar systems, Center for Strategic and International StudiesOr CSIS, he said last month.
The United States is likely to also seek guarantees from China on the purchase of American products, including agricultural goods, Wei said.
Meanwhile, Wei added, China will want to safeguard its access to US markets, ensuring that such exports continue to help boost the Chinese economy.
“China probably wants to adapt to reduce its dependence on US markets,” said Wei. “But he wants to make sure those markets are not going immediately.”
