Commercial ties between China and the United States continue to face ambiguity following two days of intense discussions in Sweden earlier this week. However, according to experts, Beijing might have actually gained a more favorable stance as Washington keeps increasing tariffs on other countries around the world.
A third round of U.S.-China trade discussions in Stockholmended on TuesdayChina stated that both parties had decided to prolong their "tariff truce" for an additional 90 days, whereas the US side maintained that the agreement was still awaiting President Donald Trump's final approval.
This implies that, assuming no unforeseen developments, the United States will maintain a 30 percent extra tax on Chinese imports after August 12, when the initial agreement is set to end.
Are you curious about the most significant issues and developments happening globally? Find the information you need withSCMP Knowledge, our latest platform offering carefully selected content including explainers, FAQs, analyses, and infographics, presented by our acclaimed team.
The rate incorporates 20 percent in tariffs that Trump introduced during the first quarter of the year, linked to China's involvement in the fentanyl trade, along with an additional 10 percent tax imposed in April.
However, in relative terms, China's tariff rate is beginning to appear less harmful, as the US intends to apply higher rates on a range of significant trading partners ahead of an August 1 deadline established by Trump.
"It's intriguing how the difference in tariffs between China and several Southeast Asian countries is narrowing rapidly," noted Amitendu Palit, a senior research fellow at the Institute of South Asian Studies at the National University of Singapore.
After all agreements are put on hold, China may not be at a major competitive disadvantage compared to other nations.
The United States has already revealed agreements thatimpose a 20 percent taxon imports from Vietnam, along with 19 percent tariffs onproducts from Indonesia and the Philippines.
If no additional agreements are reached by Friday, Washington plans to also impose 25 percent tariffs on nations such as South Korea and Malaysia, along with 36 percent duties on Thailand.
The decreasing difference in tariff rates suggests that direct trade between the US and China could start to rebound, following years of goods movementbeing routed through "connector" economiesAs Vietnam and Indonesia, Palit said.
Dan Wang, the China director at Eurasia Group, stated that the existing US tariff rates would affect China to a limited extent, mainly because of the nation's large economic size.
"Other nations might experience minor shifts, but the extent is limited and the range of impacted goods is narrow," she stated.
Additionally, prices are flexible. China's extensive industrial supply chain enables it to bargain with suppliers to change materials or modify designs, thereby effectively countering the rising expenses.
Nevertheless, the US could still impose tariffs on certain items during the prolonged US-China tariff ceasefire, for instance via a Section 301 inquiry, noted Zhang Zhiwei, president and chief economist at Pinpoint Asset Management.
At a press event held in Stockholm on Tuesday after the trade discussions, US Trade Representative Jamieson Greer mentioned that increased tariffs on Chinese products could be "subject to the specific item".
Maria Monica Wihardja, a visiting fellow at Singapore's ISEAS-Yusof Ishak Institute, noted that although the US tariff on China was expected to stay at 30 percent for the time being, it was difficult to determine if China was preserving or losing its export competitiveness compared to other nations, given the many unclear aspects in the trade agreements.
None of the agreements involving Trump are finalized," she stated. "In numerous instances, it remains uncertain which additional tariffs have been imposed or might be imposed in the future, in addition to the base tariffs mentioned in the news.
According to Wihardja, the agreements that other economies reached with the United States aimed to reduce damage rather than achieve maximum benefits. These deals were a response to the defensive stance taken against the US's unilateral tariffs and an uneven negotiation process, where nations had to make compromises in exchange for reduced tariff rates.
"This stands in contrast to the US-China negotiations, where China holds significant negotiating leverage, such as its exports of rare earth materials to the United States," she stated.
China "is likely the only nation capable of responding effectively," she said. "It holds numerous options to achieve an agreement that benefits it, unlike other countries."
Under the existing tariff ceasefire, China will keep its duties on all US imports at 10 percent, in addition to an extra 10 to 15 percent on specific American goods—such as energy and agricultural products—that were imposed as retaliation against the fentanyl tariffs.
In recent years, nations such as Vietnam, Thailand, and Indonesia have progressively established themselves as alternative manufacturing centers for the U.S. market, especially within industries like textiles, simple electronics, and assembly-oriented production, according to Matteo Giovannini, a senior finance manager at the Industrial and Commercial Bank of China.
"Nevertheless, China still holds significant structural advantages that keep it distinct. Its manufacturing system is much more advanced, featuring highly integrated supply chains, top-tier infrastructure, and unparalleled production capabilities," stated Giovannini, who is also a non-resident associate fellow at the Center for China and Globalization think tank.
Especially, American clothing companies continue to be highly worried about the future of US-China trade under Trump andplan to further "cut their reliance on China"to reduce supply chain risks, as stated by Sheng Lu, a professor in the Department of Fashion and Apparel Studies at the University of Delaware.
A survey of 25 top US clothing brands and retailers revealed that over 80 percent intend to cut their clothing procurement from China in the coming two years, even after the tariff agreement made in May.
Several major American fashion brands have already started reducing or intend to reduce their clothing procurement from China to a "low single-digit" share by 2026 or sooner, according to Lu.
Although US fashion companies continue to view China as highly economically competitive as a source for apparel compared to many of its Asian rivals in terms of costs and efficiency, non-economic factors—especially the perceived very high risks of encountering US import restrictions—are influencing their efforts to reduce risks, Lu stated.
More Articles from SCMP
The film review of "The Naked Gun": Liam Neeson portrays a clumsy officer in a funny new version of the comedy.
Beijing aims to 'apply effort' to boost economic growth; China's vibrant cities: SCMP daily features
A U.S. Earth observation satellite network is being described as 'low-cost orbital landmines' by a Chinese research group.
CATL reports a 34% increase in profits, overcoming sluggish global electric vehicle demand and geopolitical challenges.
Review of Prime Video's K-drama "Head Over Heels": a supernatural romantic comedy that falls short of expectations
This piece was first published in the South China Morning Post (www.scmp.com), a top news outlet covering China and Asia.
Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.