The Current US-China Tariff Situation

Understanding the Situation, as of June 2, 2025

A temporary truce offers a brief respite from escalating reciprocal duties, but a complex web of core tariffs and deep-seated strategic competition creates a landscape of unprecedented uncertainty and cost for global businesses.

A Fragile 90-Day Truce

The May 12, 2025 agreement dramatically reduced the highest reciprocal tariffs, establishing a 90-day window for negotiation. This strategic pause eases immediate pressures but leaves underlying frictions unresolved.

U.S. Reciprocal Tariffs on China

145%→30%

(Temporary Rate)

China's Retaliatory Tariffs on U.S.

125%→10%

(Temporary Rate)

The Enduring Core: Tariffs Unaffected by the Truce

Despite the temporary de-escalation, several significant U.S. tariff regimes on Chinese goods remain firmly in place, targeting strategic sectors, national security, and public health concerns.

Section 232: National Security

Invoked for national security reasons, these tariffs apply a broad duty on steel and aluminum imports, including derivative products. A key change in March 2025 was the elimination of all country-specific exemptions, hardening the U.S. stance and increasing costs for a wider range of global supply chains.

25%

Ad Valorem Tariff on Steel & Aluminum Imports and their Derivatives

IEEPA: Fentanyl Crisis Response

Using the International Emergency Economic Powers Act, the U.S. imposed a broad tariff on all Chinese imports as a non-trade tool to combat the fentanyl crisis. This duty is explicitly retained during the truce, signaling its distinct and non-negotiable status. Additional per-item fees target low-value postal shipments.

20%

Broad Tariff on ALL Chinese Imports

+ $200 per postal item

Section 301: Strategic Industrial Policy

These tariffs target China's alleged unfair trade practices in technology and intellectual property. A May 2024 review resulted in major increases for strategic sectors, aiming to protect and promote key domestic industries like clean energy and advanced tech. These rates are being phased in from 2024 to 2026.

Projected Short-Run Price Increases by Sector

Timeline of Tensions

A look at the key moments that have defined the volatile U.S.-China trade relationship over the past several years.

Aug 2018

U.S. begins implementing Section 301 tariffs, citing unfair trade practices and IP theft, firing the opening shots of the trade war.

May 2024

A four-year review of Section 301 concludes, leading to new, higher tariffs on strategic sectors like EVs, solar, and semiconductors.

Mar 2025

Tensions escalate with new 25% Section 232 tariffs on steel/aluminum and a broad 20% IEEPA tariff related to fentanyl.

May 2025

A temporary 90-day truce is announced, dramatically lowering reciprocal tariffs but keeping core punitive duties in place.

June 2025

Tensions rapidly re-escalate over non-trade issues like AI chip controls, threatening the fragile stability of the May agreement.

The Tariff Stack: How Duties Combine

Calculating the final cost of an import isn't simple. Multiple tariff layers can "stack" on top of each other, creating a complex and costly calculation for businesses. Here is a simplified model for a generic Chinese import.

START: Chinese Product Value (e.g., $1000)

Layer 1: Reciprocal Tariff (Temporary)
+10%

Layer 2: Fentanyl Tariff (IEEPA)
+20%

Layer 3: Section 301 Tariff
+7.5% to 100% (If Applicable)

FINAL LANDED COST: Base Value + All Applicable Tariffs

Note: This is a simplified example. Section 232 tariffs and others follow separate, complex application rules and do not always stack in this manner.

The Economic Ripple Effect

The cumulative effect of these tariffs has significant consequences for the U.S. economy, leading to higher consumer prices, reduced GDP, and a regressive impact on households.

Avg. Effective Tariff Rate

17.8%

Highest level since 1934

Avg. Loss Per Household

$2,800

In 2024 dollars

Real GDP Growth Reduction

-0.7%

Projected short-run impact

‼️ BREAKING ‼️