According to sources familiar with the discussions, Bloomberg News reported on Friday that China is considering the suspension of its 25% tariffs on selected imports from the United States, including items such as medical devices, ethane, and aircraft leasing arrangements.
“Authorities are also considering a tariff exemption for aircraft leases,” the sources noted.
Neither China’s Ministry of Finance nor the General Administration of Customs have offered a response to requests for clarification at this time.
Market reaction
The news appears to have bolstered the US Dollar (USD), which has seen renewed strength across various currency pairs. As of this writing, AUD/USD is trading up by 0.20% at 0.6415, while US S&P 500 futures have risen by 0.40% thus far.
US-China Trade War FAQs
In general terms, a trade war signifies an economic dispute between nations, often stemming from intense protectionist policies. This involves the implementation of trade restrictions, such as tariffs, which in turn can lead to retaliatory measures, increasing import costs and, consequently, the cost of living.
The economic friction between the United States and China commenced in early 2018, when then-President Donald Trump imposed trade barriers on Chinese goods, citing unfair trade practices and the theft of intellectual property by the Chinese. China responded with its own tariffs on a range of US products, including vehicles and soybeans. These tensions continued until the US and China signed the Phase One trade agreement in January 2020. This agreement was designed to implement structural reforms and other modifications to China’s economic and trade systems, with the aim of restoring stability and confidence between the two countries. However, the COVID-19 pandemic shifted the focus away from this conflict. It is important to note that President Joe Biden, who succeeded Trump, maintained the existing tariffs and even introduced additional ones.
The potential return of Donald Trump to the White House as the 47th US President has raised concerns about renewed tensions between the two nations. During his 2024 election campaign, Trump pledged to impose tariffs of 60% on Chinese goods upon his return to office, which occurred on January 20, 2025. With Trump’s return, the US-China trade war is expected to resume where it left off, with reciprocal policies impacting the global economic environment through disruptions to global supply chains, reduced spending (particularly in investment), and direct contributions to Consumer Price Index inflation.
