US Eyes Major China Tariff Cuts as Trade Talks Advance

On July 1, China's Ministry of Commerce said agricultural trade remains a key component of China-U.S. economic and trade cooperation, responding to questions over potential tariff reductions or exemptions on U.S. agricultural products.

The ministry's spokesperson said that, following recent trade consultations, both sides had established guiding objectives to expand two-way agricultural trade and had, in principle, agreed to include relevant agricultural products in a reciprocal tariff reduction framework. Companies will conduct trade independently based on market principles, actual demand, and commercial conditions. China said it is willing to work with the United States to create favorable conditions for bilateral agricultural trade.

The planned tariff reductions would cover at least $30 billion worth of goods on each side, equivalent to approximately RMB 203.7 billion, marking one of the largest reciprocal tariff adjustment proposals in recent China-U.S. trade discussions.

Under the proposed arrangement, the United States is expected to reduce or eliminate additional tariffs, primarily those imposed under Section 301, with affected products potentially returning to standard Most-Favored-Nation (MFN) tariff rates. The tariff reduction process will be implemented within the framework of the China-U.S. Trade Committee, providing an institutional mechanism for implementation.

The Office of the United States Trade Representative (USTR) is currently seeking public comments on both the operational mechanism of the China-U.S. Trade Committee and a proposed tariff reduction list covering approximately $30 billion in Chinese imports. The final list is expected to be released after July 10, 2026.

According to the current proposal, the U.S. tariff reductions would primarily target non-strategic products, including consumer electronics, household goods, apparel and footwear, non-sensitive industrial and medical equipment components, and energy-related products.

Product categories expected to benefit include:

• Consumer goods and light industrial products, such as home appliances, furniture, textiles, apparel, footwear, home furnishings, toys, and household products.

• Selected consumer electronics, mainly non-core components, accessories, and peripheral devices.

• Manufacturing inputs, including certain chemicals, plastic products, and basic raw materials excluding critical minerals.

• Industrial machinery and lower-technology mechanical components.

• Processed agricultural products and selected non-high-tech medical consumables.

Most of these products are currently subject to Section 301 tariffs ranging from 7.5% to 25%, which could be eliminated under the proposal, allowing tariff rates to return to MFN levels.

If the initial reciprocal tariff reductions covering $30 billion of goods are implemented successfully, the scope of future tariff reductions could be expanded.

Separately, the United States is preparing to introduce two new Section 301 tariff measures in July to replace the temporary 10% Section 122 tariff, which is scheduled to expire on July 24. The new measures are not directed exclusively at China.

One measure relates to a Section 301 investigation concerning forced labor, while the other focuses on structural overcapacity in manufacturing.

On June 2, the USTR released the findings of the forced labor-related Section 301 investigation and proposed tariff recommendations. The proposal would impose a 12.5% Section 301 tariff on imports from 46 countries and regions, including mainland China and Hong Kong, while imports from another 14 countries and regions would face a 10% Section 301 tariff.

Public hearings on the proposal are scheduled for July 7–9, after which the tariff rates are expected to be finalized and take effect.

The results of the second Section 301 investigation, covering structural manufacturing overcapacity among 16 of the United States' largest trading partners, including China, the European Union, and Japan, are also expected to be released in July.

Taken together, the United States is expected to replace the expiring 10% Section 122 tariff with new 10% and 12.5% Section 301 tariffs, while also applying an additional Section 301 measure. As a result, although the Section 122 tariff will expire on July 24, the transition to new Section 301 tariffs is expected to be seamless, leaving overall tariff pressure at a relatively elevated level.