US-China tariffs: surprise deal in Geneva

A 90-day reprieve

As Reuters and other media outlets report delegates from the USA and China took the surprise move of de-escalating the rising trade conflict, which kicked off with Trump’s first round of punitive tariffs in February. The following will apply by 14 May:

- US import tariffs for products from China will decline to 30% from 145%

- China’s import tariffs for US products will decline to 10% from 125%

- China will take back other non-tariff measures

- these tariff slashes will apply for 90 days

As negotiations for a permanent trade deal are still underway and Trump takes constant U-turns responses are a mix between relief and caution. Hopes over an easing of global trade war dynamics prompted major US indexes to rally sharply on Monday and propelled the US dollar up to a one-month high. While Chinese online retailers such as Temu and Shein are expected to seize the moment to restock in time for Christmas, major US port operators rather expect only companies requiring urgent supplies to stock up, whereas most businesses will prefer to wait for greater clarity before entering larger contracts.

Although Trump is keen to point out that he is in a strong position as China was forced to the table with companies having to lay off workers, it is rather the case that economic reality backfired on Trump and his team. Details on the non-tariff measures China intends to roll back are still to emerge and China is expected to take a strong stand in negotiations in the next three months. Business leaders in China also see the deal as a reprieve rather than a breakthrough. Their best option is to diversify their customer base.

Diversification is key

Diversification is also key in agriculture. As Reuters has frequently highlighted China still is the most important market for US agricultural products. Yet, the import value has dropped by a sharp 39% in recent years, from USD 42.8 billion in 2022 to USD 29.25 billion. Discussions are mainly centred on the big four grains and oilseeds of soy, wheat, corn and sorghum. China has cut back on US soybean imports and has increasingly turned to Brazil. As Successful Farming hints hope is that such trends will be reversed to a certain extent as US Treasury Secretary Scott Bessent, who leads the negotiations with China, has stated that the US government “would like to see China open to more US goods”. He further added that, “there will also be the possibility of purchase agreements to pull what is our largest bilateral trade deficit into balance.”

Yet, such statements are rather vague and the approach is reminiscent of Trump’s first term in office, in which a full-blown trade war with China was resolved with the Phase Once deal, in which China committed to importing USD 80.1 billion worth of agricultural products from the US in the two years of 2020 and 2021 but effectively only bought 62% as the Peterson Institute for International Economics highlights. The tariffs imposed by Trump in 2018 have also estranged businesses and generated a lot of distrust.

Also for nuts

In addition, China is an important customer for other important US agricultural commodities, most notably nuts. As USDA Economic Research Service data shows the country is the number one export destination for US pistachios, pecans and macadamia nuts and ranks among the top five destinations for almonds and hazelnuts in 2024/2025. Yet, the same data also reveals that China has slashed spending on US tree nuts considerably by 20-80% depending on product, which is only partly explained by the production shortfalls for pecans and pistachios.

Almond Board of California President and CEO Clarice Turner has, in addition, keenly emphasised that the almond industry has completed a successful turnaround. While Trump’s tariffs caught the industry by shock during his first term in office as China was the most important customer by far, the picture has changed completely in recent years. China/Hong Kong only ranked in ninth position in March. Yet, it should be noted that the country actively also sourced US almonds in other Asian countries such as Vietnam at the start of the current season.

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