Right now, the US and China have reached a provisional agreement that aims to cool trade tensions by scaling back planned tariff increases on each other’s goods.
The deal came soon after a five-page trade agreement between the US and the UK, which may prove to be an example for other negotiated outcomes.
The So What
Here are some key takeaways from BCG’s analysis of the two
trade
deals:
- Tariffs on goods traded between the US and China will remain high even during the 90-day pause. The trade-weighted average tariff rate on Chinese imports into the US will drop from 108% to 42%, while trade-weighted Chinese tariffs on US goods will average 31%.
- The universal 10% tariff—four times higher than average US tariffs prior to the second Trump administration—appears to remain a baseline. The 25% duty on steel and aluminum and 25% cars and auto parts that aren’t compliant with the US-Mexico-Canada agreement are also expected to stay, with some room for negotiation.
- By granting a partial exemption to cars imported from the UK—but not from other partners, so far—the US has reinforced the view that tariffs will vary by country and product category, adding importance and complexity to trade compliance.
The agreements—the first of dozens promised by the Trump administration over the coming weeks—appear to confirm that the US plans to forge deals bilaterally with its trading partners on a rapid timeline, using a suite of high punitive tariffs as leverage.
The net result, however, is that US tariffs are still rising sharply—and the impact on companies and virtually all trading partners will be material.
“Businesses cannot afford to wait and see at what rate tariffs will stabilize,” says Marc Gilbert, a BCG senior managing director who leads the firm’s Center for Geopolitics.
“They must act now with the knowledge that no matter where tariff rates land, they will almost certainly be substantially higher than they were previously.”
Details of the Deals
The UK and China deals have substantial differences:
The deal with the UK appears to be the more comprehensive agreement. The US kept its 10% global tariff and agreed to drop additional levies on UK exports of steel and aluminum and up to 100,000 cars annually to the US. Among other things, the UK agreed to relax tariffs on US beef and ethanol and reduce non-tariff barriers on broader agricultural trade.
The US and China agreed to pause some tariff increases for 90 days as the two sides continue to negotiate. The US suspended its April 2 tariff and subsequent amendments of 125% on goods originating from China. These tariffs had already caused China’s exports to the US to decline by 21% year-over-year in April 2025. China dropped its retaliatory tariff of 125% and suspended non-tariff measures imposed after April 2.
However, the US will continue to apply the 10% April 2 global tariff on Chinese goods, on top of a 20% tariff the US attributed to alleged fentanyl trafficking. Specific tariffs related to intellectual property concerns (7.5% to 25%) and on other key industries on national security grounds (typically 25%) also remain in place.
On a positive note, the US-China talks appear to be a turning point in the relationship between China and the second Trump administration. The two sides appear to have developed a framework for continued dialogue, but many contentious issues remain.
“This marks the first real trade-focused negotiation between the US and China since negotiations in 2018 to 2020,” says Iacob Koch-Weser, a BCG associate director for global trade and investment.
“Given the mixed results of that agreement, however, businesses need to monitor how the two sides approach further talks and prepare for the potential impact.”
Now What
With US trade negotiations expected to continue with many nations in the months ahead, business leaders must prepare for a trade landscape that will become more complex. Here are several key implications:
- In today’s fast-changing environment, effective tariff command centers will play a critical role in helping businesses manage the associated uncertainty and complexity. Although most companies now have cross-functional teams in place to assess and mitigate tariff impacts, their performance can vary widely depending on structure, staffing, and the processes and tools they deploy.
- The US willingness to negotiate different tariffs for different countries and different products—and grant exclusions for goods for some nations but not others—means companies must prepare for a very wide range of potential outcomes. “If anything, strategic planning around tariffs has gotten even more complicated,” says Sarah Lichtblau, a BCG partner who supports businesses with tariff command centers.
- Tariff command centers need to develop a range of potential actions for each scenario, including immediate “no regrets” moves requiring little capital investment, including tariff compliance processes, communications support that can enable leaders to help shape policy, and pricing adjustments. They must also create the capability to quickly act on longer-term levers, such as supply chain redesign.
