In April, US President Donald Trump declared a national emergency, citing the country’s widening trade deficits and invoking the International Emergency Economic Powers Act. He imposed a flat 10% tariff on nearly all imports into the USA. Reciprocal tariffs against 57 countries, including a 26% duty on exports from India, soon followed. While these duties were later suspended for a 90-day period for negotiations, tariffs against Chinese imports rose generally to 145% and, on select items, to an unprecedented 245%. In response, Beijing imposed duties of up to 125%.
There is some respite, as both sides have agreed to a 90-day pause, during which the US has lowered tariffs on Chinese exports to 30%, and China has reduced the tariffs on US goods to 10%, bringing much relief to both countries. This temporary reduction should be enough for resumption of trade, as neither side was ready for a complete decoupling. However, the reduction is not adequate to restore trade to its earlier levels. Instead, the 30% tariff remains high enough to hinder trade and push the US economy towards a recession.
