The US And China Agreements On Taxes But Tension Is Still High

In this June the U.S. government, under President Trump, is moving forward with its plans to put taxes (called tariffs) on goods from other countries. There's a deadline of July 9th to finish up trade deals. Important talks with China ended on June 10, 2025. They agreed on a basic plan to make trade between the two countries more stable. But there are still worries, especially about China controlling the sale of certain important materials and whether the U.S. can get enough computer chips.

The new tax plan with China means that most goods from China will have a 10% U.S. tax. Some specific goods, especially those linked to stopping drugs like fentanyl, will have an extra 20% tax (making it 30% in total). Other goods, like electronics, already had a 25% tax, and with the new 10% tax, it will be 35% altogether.

Because of these taxes, companies are changing where they make things. Many are moving their factories to Mexico to save money. Mexico saw a huge 165% jump in money coming from foreign companies in the first part of 2025, especially for making cars and electronics. But these U.S. taxes could also mean other countries will fight back. China, the European Union (EU), and Canada are reportedly getting ready to put their own taxes on American farm products and energy. For example, the EU might put a 25% tax on American whiskey and soybeans if the U.S. puts a threatened 50% tax on their goods.

On the money side of things, the U.S. central bank (the Federal Reserve) said on June 18, 2025, that it will keep interest rates the same for now. One reason is that the U.S. has been buying a lot more from other countries, which has caused a big trade gap in the second part of the year. There's also some disagreement within the U.S. Some senators from both political parties introduced a new law on June 17, 2025, to try and stop the president from having too much power to set these taxes, saying it's bad for the economy.