[ Analysis of New Tariff Situation ]

The adjustment of tariffs between China and the US is not a comprehensive reduction to 10%, but rather based on phased measures and subsequent negotiations, with some goods retaining a 10% tariff rate.

From the current phased characteristics, both sides have suspended the 24% tariff for 90 days while maintaining the remaining 10% tariff. For example, the original 34% tariff has been suspended at 24%, leaving a remainder of 10%. The US has canceled two executive orders imposing additional tariffs, and China has canceled corresponding tariff committee announcement tariffs, with China synchronously adjusting non-tariff countermeasures.

On the positioning of the 10% tariff, the Trump administration has clearly stated that it will be considered as the "benchmark tariff" and will exist in the long term, with some sensitive areas possibly subject to higher rates; China retains the 10% tariff as a reciprocal response and to keep bargaining chips for subsequent negotiations.

In the subsequent negotiation games, the US expects China to reduce tariffs on US goods to below 60% and lift restrictions on rare earth exports, while China emphasizes that 60% is the bottom line. Currently, China's trade surplus has expanded, with a year-on-year increase of 33.6% in April, reducing dependence on the US market, with export ratios dropping from 19% to 11%, weakening the effect of US pressure. Meanwhile, if Sino-US tariffs remain at high levels, the risk of US inflation increases, and port freight volumes plummet, such as a 35% drop in the Port of Los Angeles, making China's bonded warehouses a choice for companies seeking tax avoidance.

Looking ahead, the 90-day suspension period may serve as a technical buffer, facilitating detailed consultations between both parties. However, in the long run, the US aims to set 10% as the "new normal," while China may circumvent high tariffs through regional cooperation such as Middle Eastern transshipment trade. Additionally, whether the Trump administration further compromises due to domestic pressures (such as a manufacturing PMI falling to 48.5) also becomes a key variable.

In summary, Sino-US tariffs have reached a phased compromise by suspending some tariff rates. The remaining 10% tariffs for both sides will form the basis for subsequent negotiations, with the ultimate outcome influenced by multiple factors including economic and trade resilience and geopolitical situations.

Original article: https://www.toutiao.com/article/1831912083286219/

Disclaimer: This article solely represents the author's personal views.