US and China take another step back from a full-scale trade war

The United States and China are taking another step back from a full-scale trade war. After a meeting between Donald Trump and Xi Jinping, the two sides agreed to reciprocal tariff reductions covering about $30 billion worth of goods in each direction. Around 90% of the covered products are expected to return to most-favored-nation tariff rates. However, this does not amount to a broad cancellation of US and Chinese tariffs. Instead, it is a limited agreement covering “non-sensitive” goods. Washington is prepared to ease tariffs on Chinese toys, small household appliances, holiday decorations, children’s car seats and other consumer products. Beijing, in turn, is opening opportunities for American meat, grain, fish and seafood, timber, medical equipment and other goods. China has also committed to importing at least 10 million metric tons of US coal annually in 2027 and 2028. Why have the concessions emerged now? One reason is the economy. Tariffs intended to protect American producers and pressure China also increase costs for importers and can feed through into consumer prices. Cutting tariffs specifically on toys and household goods therefore gives the White House an opportunity to demonstrate a tangible result to Americans.