U.S.-China Tariff Agreement: Move Ahead toward Further Tension-easing Measures

Editorial

15:57 JST, May 14, 2025

The United States and China, which have been engaged in an exchange of high tariff policies and retaliatory measures, have taken a step toward easing tensions. The two countries should explore measures to further improve relations based on this agreement.

The United States and China held ministerial-level trade talks in Switzerland on May 10 and 11 and agreed to reduce their additional tariffs on each other by 115 percentage points. U.S. tariffs on China will fall to 30%, while China’s tariffs on the United States will drop to 10%.

After the United States announced reciprocal tariffs on April 2, relations continued to deteriorate as both sides were stubborn and imposed high tariffs of over 100% on each other.

There were concerns that if this situation continued, it would have a significant negative impact not only on the United States and China, but also on the global economy, including Japan.

U.S. President Donald Trump called it a “total reset” in U.S.-China relations. The agreement, which exceeded expectations, indicated a positive attitude toward the improvement of relations.

U.S. Treasury Secretary Scott Bessent said at a press conference following the talks that “the consensus from both delegations … is neither side wants a decoupling.” If Washington takes a realistic path, this will be a desirable trend.

It was Trump who initially raised his fist in the first place. But widespread concern that the economic difficulties would deepen more on the U.S. side than on China’s, which was hit hard by declining exports, was a miscalculation by him.

The United States imports many products from China that are essential to people’s lives, such as home appliances and daily necessities. High tariff measures would inevitably accelerate inflation.

The approval ratings of the Trump administration have been on a downward trend. Trump probably wanted to avoid any further increase in public dissatisfaction. It can be said that signs of fraying are visible in Trump’s approach to making deals, in which he presses his opponents to reform by imposing high tariff measures.

However, future negotiations between the United States and China could take twists and turns. Of the tariff reductions, 24 percentage points will be suspended for 90 days, during which time the two countries will proceed with negotiations. But China’s unfair subsidies, overproduction and closed markets, among other issues, will be difficult to resolve in such a short period of time.

To press China to make corrections, it is effective to utilize a multilateral framework that includes Japan and Europe. Japan should continue to persistently explain this to the United States.

On the other hand, the tariff negotiations between Japan and the United States warrant no optimism. Trump has indicated his intention to maintain the additional tariffs on automobiles and other products even after reaching an agreement with China.

It is likely that Trump will maintain his hard-line stance toward Japan in the automobile area. A situation must be avoided in which high tariffs are imposed on automobiles, a key industry for Japan. The Japanese government should approach negotiations based on this premise.

(From The Yomiuri Shimbun, May 14, 2025)