Source: FT Chinese
China and the United States negotiated as scheduled and issued a statement - returning to the basic "reciprocal tariff" level of 10% added in April this year. However, "details are the key", so we still need to sort out the statement itself and make the details clear.
The two sides reached only one substantive consensus - to cancel the "spiraling" 91% tariffs on each other and suspend the 24% tariff for 90 days. It is important to note here that the "90-day suspension of the 24% tariff" is actually the same as the measures Trump announced on April 9 against other countries - suspending the portion of tariffs exceeding 10% in each country for 90 days.
However, China was a full month late, which caused the deadline for negotiations between the United States and China to be postponed by one month accordingly. This has created a significant uncertainty in the negotiations among countries - whether they will collectively delay and wait for the results of the negotiations with China.
This tariff negotiation issue is a typical issue of forming alliances or making alliances. Countries can form alliances and delay each other to wait for a turnaround; or they can form alliances and reach an agreement as soon as possible to obtain more favorable terms. From the perspective of the United States, of course, it encourages "horizontal alliances": by giving better conditions to the first negotiator, the United States can encourage everyone to make concessions as soon as possible.
However, all countries are clearly skeptical about whether they can gain benefits by reaching an early agreement. The problem here is that if the later countries reach better conditions for various reasons, the country that reaches the agreement first will be in an extremely embarrassing situation - this will leave the impression of "a warm response" in the country, which will have a huge negative impact on the political life of the politician.
In fact, the UK, which was anxious to negotiate before, faced such a dilemma. In the consensus reached between the UK and the US, the US did not grant exemptions from the 10% tariff imposed on British goods. Instead, it slowed down the original 25% additional tariff on automobiles, the main commodity exported by the UK to the US (and it was still relaxed through a quota system, increasing from 2.5% to 10% for the first 100,000 vehicles, and 27.5% thereafter). In contrast, the UK has liberalized imports of many agricultural products from the United States (such as beef and alcohol), and has to spend money to buy $10 billion worth of Boeing aircraft. Although the conditions alone are not unreasonable, for the UK, a country with a trade surplus, how the agreement goes is something only the person who drinks the water knows.
If the British negotiations finally achieved something, the Vietnam negotiations seemed extremely difficult. The talks lasted for a whole month from April to May, and are still at the stage of "promoting the negotiation process" and have not entered into substantive negotiations.
If the UK’s tariff negotiations are one case, China’s are another. In the entire text, the most important word should be "accordingly" in the sentence about China's tax reduction measures; at the same time, in the Chinese and English versions of the joint statement, the US side came first and the Chinese side "accordingly" came later. To some extent, this reflects China's position that "the talks are held at the request of the US side, and China will not withdraw before the US withdraws."
It can be seen that countries around the world have mixed feelings when seeing such a stance. On the one hand, those who took the initiative to form alliances did not get better results - Britain, as a surplus country, was asked to expand its surplus; on the other hand, China insisted on its position and forced the United States to the negotiating table.
This obviously puts tremendous pressure on the US tariff negotiation team. However, logically speaking, this is the first time in world history that the United States has been conducting tariff negotiations with more than 100 countries at the same time. It is obviously impossible for the hundreds of countries in the world to reach an agreement within 90 days, even if each country only takes one day. How many officials and civil servants in the U.S. bureaucracy (especially senior officials of a certain level who can represent the United States in foreign negotiations) can make Trump go through so much trouble? If countries change their attitudes and fail to reach an agreement within one day, and the talks drag on for a few more days, the 90 days will become even more stretched and exhausting.
This will further complicate tariff negotiations, making it very difficult to reach an agreement within 90 days - therefore, the 10% tariff will most likely be extended beyond July (August for China) and will eventually become the de facto standard. However, if a 10% tariff is imposed on all countries in the world, then there is no point in negotiations; for countries in the world, if it is still 10% even without negotiations, and if other concessions are made in addition to the 10% after negotiations, then the best strategy is to pretend to be submissive and wait for the 90 days to pass.
Therefore, after the negotiations between the UK and China, countries that saw this have become tougher in their attitudes toward the United States, betting that the Trump team cannot control the "Seven Injury Fist" of tariffs (the characteristic of the Kongtong School's Seven Injury Fist is to hurt yourself first, then hurt others, and the user will suffer backlash if his or her skills are insufficient). For example, when Japanese Prime Minister Ishiba spoke with Trump on the phone on April 7, he was still relatively mild in emphasizing the importance of Japan to the United States; but on May 11, as soon as the British agreement negotiations came out and China and the United States began talks, Prime Minister Ishiba began to look at the 10% tariff on British cars and said that "we must negotiate the car tariff towards 0."
Now that we have talked about the pace and complexity of tariff negotiations, let’s move on to this statement.
The US's previous tariff measures against China mainly include several aspects: one is the tariff itself, and the other is to stop the tax-free policy for small cross-border packages.
China's exports to the United States in 2024 will amount to US$438.9 billion (according to the U.S. statistics, and US$524.7 billion according to Chinese statistics). What proportion of this will be cross-border small packages? According to statistics from the U.S. Customs in 2024, 1.36 billion small packages were received throughout the year, of which about two-thirds came from mainland China and Hong Kong (i.e. 900 million). Calculated at US$100 per package (although US officials claim that the average declared amount of each package is US$20, there is inevitably false reporting), the import value of small packages is US$90 billion, equivalent to 20% of Sino-US trade.
In a new executive order on May 12, 2025, Trump proposed reducing tariffs on small packages through the postal channel from 120% to 54%. But this is of no use for small parcels - the previous executive order imposed unreasonable withholding obligations on carriers of postal small parcels (such as airlines) (airlines and postal companies were required to prepay a deposit worth hundreds of millions of yuan), which both China Post and Hong Kong Post refused to do. China Post’s attitude was more tactful, stating that it “does not meet the conditions for paying taxes”, while Hong Kong Post pointed out bluntly that it “will never collect so-called customs duties on behalf of others”.
This has effectively cut off the trade of small parcels between China and the United States - no matter how much the tariffs are lowered, as long as the system of pre-collecting deposits and withholding payments does not change, and customs declarations for small parcels by express delivery companies and private logistics companies are not restored, there is no way to change the current situation that small parcel trade will not be restored in the short term.
If we take into account the characteristics of China's exports to the United States, bulk exports of electronic products and the like have been exempted from tariffs in advance, the proportion of small package imports in the imports affected by tariffs will only be higher; if we also consider the reality that small package exporters are mainly private enterprises (rather than foreign-funded enterprises) and small and medium-sized enterprises, small package exports are actually quite important for employment in China's export industries.
However, the US obviously does not want to open this loophole - or at least, the US does not want to open this loophole without any restrictions. On the one hand, if tariffs are still levied on formal declarations but no tax is levied on small packages, things will quickly turn into an asymmetric war between small packages and formal trade, just like during Trump’s first term; but on the other hand, if Chinese small packages are completely banned, the supply of daily necessities in the United States will indeed be greatly affected.
At the same time, since the value of small packages is not high, in order to reduce the cost of law enforcement, Trump’s executive order defines ordinary goods as “origin” and importers must submit certificates of origin, while small packages are defined by “place of shipment” and only the sender’s location is considered. This makes re-export trade in the small package sector completely feasible if one is picky about the wording. Therefore, it can be seen in the previous executive order that in addition to abolishing the small package customs clearance policy for packages originating from mainland China and Hong Kong, China, the government is also seriously considering whether to abolish the small package policies of countries around the world.
Therefore, the real difficulty in trade negotiations lies in these detailed and specific terms.
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