A lot of misinformation is circulating on the US/China trade pause. I am concerned that the White House is purposely trying to confuse the public, so I made a chart to explain what is really happening here.

The White House is reporting that China will lower its tariffs to 10 percent and the US will lower them to 30 percent. Many are taking this to mean China capitulated to a lower rate than the US. This is false.

Since taking office, Trump has levied several "tranches" of tariffs on Americans who buy Chinese goods. These can be grouped as follows:

1) 20% on all Chinese goods (The "fentanyl" tariffs.)

2) +10% on all Chinese goods* (The "Baseline" tariff)

3) +24% on all Chinese goods* (The "Reciprocal** tariff)

4) +91% on all Chinese goods* (The "Excalation" tariffs.)

China responded to the "fentanyl" tariffs with levies of 10-15% on $34 billion of American goods. China also responded, dollar for dollar, to the "baseline," "reciprocal," and "escalation" tariff tranches, up to 125 percent.

Here is the important part:

What the US and China agreed to do was to temporarily drop the "escalation" and "reciprocal" tariff tranches, but both get to keep the 10 percent "baseline" AND "fentanyl" levies. But the way the White House is reporting the numbers makes it appear China lowered its tariffs more than the US; that is not what happened. The White House lumped the "fentanyl" tranche with the "baseline" tranche for the US...but didn't do the same for China.

What this means is that China, the only country thus far to retaliate against Trump's "reciprocal" tariffs, is getting the SAME 10 percent rate and 90-day pause as every other country.

I am not complaining, it's a positive development, but this is not a "win," it's a capitulation on the US end. As I predicted, the US was unable to hold its ground against Chinese retaliation. But it also means that Chinese tariffs on American goods are still MUCH higher than they were just a few months ago under Biden. In fact, they are much higher than they were in March.

See my graphical representation below.

*Many goods are exempted, including computers and smartphones

**Reciprocal tariffs are not truly reciprocal and based on faux math