May 12, 2025Tariff pause greeted with relief by stock markets; ag impact still murky
In a move that could bring welcome relief to specialty agriculture and horticulture businesses caught in the crossfire of international trade disputes, the Trump administration announced on Monday morning a 90-day reduction in tariffs on Chinese imports.
Reuters, CNN, NBC News and other news outlets reported U.S. tariffs on Chinese imports will be cut from 145% to 30%, while Chinese tariffs on U.S. imports will fall from 125% to 10%.
Officials from the two counties met in Geneva over the weekend.
The new 30% rate is the sum of the 20% duty imposed during the first weeks of President Donald Trump’s second term in response to alleged Chinese inaction on fentanyl flows, alongside the 10% across-the-board tariff Trump has imposed on all countries, according to an NBC News report.
In reaction to the news, the S&P 500 climbed 2.6% and the Dow Jones Industrial Average 2.5%. Tech-focused Nasdaq jumped 3.5%. Technology stocks, including smartphone makers, had dipped amid trade tensions.
The agreement said countermeasures imposed by China after April 2 would be removed. On March 4, China announced levies on $21 billion worth of American agricultural and food products.
China imported $29.25 billion worth of U.S. agricultural products in 2024, according to Reuters. That included about half of U.S. soybeans, the largest U.S. ag commodity shipped to China, or $12.8 billion.
The U.S. soybean market share in China dropped to 21% in 2024 from 40% in 2016, Reuters reported, as China increasingly relies on cheaper Brazilian product.
Overall, U.S. ag exports to China have declined since tariffs of up to 25% on soybeans, beef, pork, wheat, corn and sorghum in retaliation for duties on Chinese goods were imposed by Trump in his first term in 2018.
Also Monday, the U.S. and the U.K. announced a framework trade agreement. According to Politico, the U.S. plans to export $5 billion in products like machinery and ethanol, along with agricultural products, to Great Britain, with the 10% baseline tariff on British imports remaining.
In return, the U.K. can export to the U.S. 100,000 cars at a 10% tariff rate instead of the current 25% rate.
