The United States and China announced an agreement on May 12 to significantly reduce tariffs imposed earlier this year for a period of 90 days, clearing the way for further discussions between the two countries regarding their trade relationship.

Under the agreement, both the United States and China will reduce tariffs imposed in 2025 by 115%. Chinese imports to the United States will be subject to a 30% tariff, which includes the standard 10% county-by-country tariff along with a 20% tariff under the International Emergency Economic Powers Act (IEEPA) to address the flow of fentanyl into the United States. Meanwhile, American exports to China will be subject to a 10% tariff. Products imported from China are still subject to Section 232 tariffs of 25% that were first imposed in 2018.

The agreement is a significant step forward in preventing a trade war between the United States and China, helping small businesses that import components and products from China.

SEMA's recent letter to President Trump outlined the impact of recently imposed tariffs on the specialty automotive aftermarket and motorsports industry, and highlighted the need for an orderly transition that provides U.S. businesses time to re-shore their manufacturing along with economic relief to assist in that transition rather than sharp increases in tariffs. The United States-China agreement is a major step in this direction with both countries significantly reducing tariffs that would have brought trade between the two nations to a standstill.

The United States and China announcement was the product of a successful negotiation between Treasury Secretary Scott Bessent and He Lifeng, China's vice premier of the state council, in Geneva, Switzerland, which sets a path for future discussions to open market access for American exports. Both countries affirmed the importance of the critical bilateral economic and trade relationship and agreed to establish continuing discussions about trade and economics.

For additional information, contact Eric Snyder, SEMA and PRI's senior director of federal government affairs, at erics@sema.org.

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