The Trump administration and China agreed in mid-December to a truce in their 18-month trade war. But even their so-called Phase 1 agreement locks in tariffs at levels that would have been unthinkable before President Donald Trump took office. Under the Dec. 13 deal, Trump suspended his plans to impose tariffs on virtually all Chinese imports that he hadn’t already targeted, and he halved taxes on about $110 billion in Chinese goods to 7.5%. But $250 billion in imports from China still face a 25% tax. And there’s no sign that those tariffs will be going away.
Chad Bown of the Peterson Institute for International Economics calculates that the Phase 1 agreement will leave 64.5% of Chinese imports covered by Trump’s tariffs. Beijing’s retaliatory tariffs affect 56.7% of American exports to China. The average tariff on Chinese imports has risen from 3% in January 2018 to 21% now. High tariffs between the world’s two biggest economies, Bown says, are now “the new normal.’’ The U.S. trade deficit is still high, and the underlying cause of the trade war — China’s drive to supplant America’s technological dominance — remains unresolved.