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The United States and China have agreed to a significant de-escalation of their trade war by temporarily reducing the steep tariffs each imposed in recent months, marking a breakthrough after months of escalating tensions. The U.S. will cut its tariffs on Chinese goods from 145% to 30%, while China will reduce its duties on American products from 125% to 10%, in a 90-day suspension meant to allow time for further negotiations. The announcement followed weekend talks in Geneva led by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, who emphasized that neither side seeks economic decoupling. The deal aims to restart stalled trade flows, avoid deeper global economic fallout, and address U.S. concerns such as the trade deficit and Chinese retaliation.

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The deal outlines that actions will be taken by May 14, 2025, and does not eliminate or pause any additional duties, including Section 301 or Section 232 duties. The language in the joint statement includes that “China will ... adopt all necessary administrative measures to suspend or remove the non-tariff countermeasures taken against the United States since April 2, 2025”, meaning that the agreement addresses both tariff and non-tariff retaliatory measures taken by China.

Talks are set to continue, with hopes that this truce will lead to a broader, more permanent agreement. View the press conference <a href="https://url.us.m.mimecastprotect.com/s/wfgLCmZ7pAIvq1NDIGf4fRES8f?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noopener">here</a> and the joint statement on the meeting <a href="https://url.us.m.mimecastprotect.com/s/tSsfCn5GqBcnVlNjuJhMfJHWQd?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noopener">here</a>.

Last week, President Donald Trump and UK Prime Minister Keir Starmer<b> </b><a href="https://url.us.m.mimecastprotect.com/s/WFFICo2ArDhkml3ZUVi9fpf24r?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noopener">announced a U.S.-UK trade deal</a> intended to deepen economic ties, increase market access for American exporters (particularly in agriculture), and bolster national security. The agreement includes commitments to reduce or eliminate UK non-tariff barriers and creates a $5 billion opportunity for U.S. farmers, ranchers, and producers, including over $700 million in ethanol exports and $250 million in beef and other agricultural products. The deal includes a provision for UK cars, where the first 100,000 vehicles imported into the U.S. annually will be subject to a 10% tariff, with a 25% tariff applied to any additional vehicles.

U.S. aerospace manufacturers gain preferential access to high-quality UK aerospace components, maximizing competitiveness and securing supply chains for the industry. The deal also establishes a new trading union for steel and aluminum, addressing Section 232 tariffs and recognizing UK measures to combat global steel excess capacity. Both sides will negotiate an alternative arrangement for these tariffs.

However, despite the sweeping rhetoric, the deal remains largely a framework or memorandum of understanding, with key provisions still to be negotiated. The U.S. and UK are expected to begin formal negotiations to fill in the details of the announced trade framework, focusing on sectors like agriculture, aerospace, and pharmaceuticals. Working groups will likely be established to address regulatory alignment, dispute resolution, and implementation logistics. As negotiations progress, the deal could evolve into a formal free trade agreement, potentially requiring legislative approval in one or both countries.

New Section 232 Investigation on Aircraft, Engines

The Commerce Department<b> </b><a href="https://url.us.m.mimecastprotect.com/s/PF9wCpY9vEc5ZQ3KUGsGfGa63e?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noopener">announced another Section 232 investigation</a> regarding the national security implications of imported parts of jet engines and commercial aircraft. The announcement invites public comments by June 3 and seeks detailed input on issues such as U.S. production capacity, reliance on foreign suppliers, the impact of foreign subsidies and unfair trade practices, and the risks of import concentration. The Trump Administration, known for invoking Section 232 to justify tariffs on aluminum and steel, may be signaling a similar path for aerospace imports. Delta Air Lines, a major Airbus customer, has already declared it will delay deliveries rather than pay new tariffs, while <a href="https://url.us.m.mimecastprotect.com/s/c9d1CqxA0GT9vLjlfNtVfE1TRG?domain=rnn4sp8ab.cc.rs6.net" target="_blank" rel="noopener">the new trade deal may exempt</a> certain British aircraft components like Rolls-Royce engines. The investigation underscores growing concern over foreign leverage in critical industrial sectors and may lay the groundwork for additional trade barriers to protect the domestic aerospace industry.

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Are you concerned about the impacts of the outlined trade issues? Please contact Sarah Helton, Michael Best Strategies’ Trade Practice Lead at <a href="mailto:sarah.helton@michaelbest.com" target="_blank" rel="noopener">sarah.helton@michaelbest.com</a> for assistance.

Forklift lifting a shipping container between large stacks of multicolored containers at a port during sunset.

Stacked cargo containers in multiple colors at a shipping yard during sunset.

Trump Trade 2.0: Tariff-ic Trade Deals Arrive

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