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China says U.S. pledged to cap replacement tariffs at 20%
Beijing notes that the current replacement tariff is 12.5%
Key Takeaways:
- China said July 27 the U.S. committed during trade talks to cap replacement tariffs on Chinese goods at 20%, with current duties at 12.5%.
- The disclosure signaled Washington has 7.5 percentage points for further increases while a tariff truce has helped ease previously escalating trade tensions.
- China said it will assess future U.S. actions and reserve countermeasures while a separate U.S. investigation could lead to additional levies.
China said the U.S. had committed to cap replacement tariffs on Chinese goods at 20%, staking out a limit on further increases after President Donald Trump imposed a new levy.
The Commerce Ministry disclosed the commitment for the first time July 27, saying Washington had made it during bilateral trade talks. By pointing out that the current replacement tariff is 12.5%, Beijing appeared to signal that the U.S. has 7.5 percentage points of room for additional increases before reaching the stated ceiling.
READ MORE: U.S. presses Mexico to mirror its steel tariff wall on China
The Trump administration’s new tariffs came as the U.S. president rebuilds a protectionist wall after the Supreme Court struck down his initial levies. The duties are in line with tariff levels it had proposed last month on 60 trading partners, citing what it said were inadequate efforts to address forced labor. The new rates replace global duties of 10% that expired on July 24.
The U.S. has also previously initiated a separate probe into China, citing alleged overcapacity issues in its manufacturing sector. The outcome of that investigation could lead to a further increase in levies.
For its part, China’s retaliatory measures against the first round of U.S. fentanyl and reciprocal tariffs remain in effect, it said in the statement. The ministry also criticized Washington for imposing tariffs due to forced labor concerns, with Beijing saying it had established a comprehensive legal framework to prevent and combat the practice.
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The U.S. has also previously initiated a separate probe into China, citing alleged overcapacity issues in its manufacturing sector. (Kena Betancur/Bloomberg)
“We will continue to closely monitor and fully assess subsequent U.S. measures, and reserve the right to take all necessary measures,” the ministry said. It urged the U.S. to correct its “erroneous practices,” remove unilateral tariffs and continue resolving differences through dialog.
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China said that the U.S. had indicated the levies would replace duties imposed under the International Emergency Economic Powers Act and Section 122 import surcharges.
The immediate absence of countermeasures indicates the easing of tensions continues and is thanks in large part to a truce in a tariff fight that at one point last year saw U.S. levies surge to as high as 145%. The one-year deal — unveiled at the summit between Trump and President Xi Jinping in South Korea and set to expire in November, unless extended — has led to a suspension of some tariffs, rare earth curbs and investigations into China’s shipbuilders.
Under the terms of an agreement reached in Malaysia last October, the effective rate on Chinese imports into the U.S. reached about 30% and was later reduced after some levies were struck down by the Supreme Court. In May, China signaled it would accept some increase in U.S. tariffs to the level negotiated last year and would continue talks to extend the trade truce.
