| The US-China tariff war peaked at a combined 145 percent rate on Chinese goods in April 2025 before a series of legal and diplomatic reversals brought the average effective US tariff rate down to roughly 6.7 percent by mid-2026. This guide covers how the rate climbed and fell, why the Supreme Court struck down the legal basis for most of it, what replaced it, what China did in response, and what it now costs the average US household. Universalnest tracks this fast-moving trade story as part of its ongoing Current Affairs coverage. |
Trump’s China Tariffs Peaked at 145% Before a November 2025 Truce Cut Them to 47%
The combined US tariff rate on Chinese goods reached 145 percent in April 2025, the highest point of the trade war, before falling to 47 percent after a Kuala Lumpur trade agreement took effect on 10 November 2025.
The April 2025 peak stacked two separate tariff lines: the standard reciprocal tariff and a distinct “fentanyl” tariff tied to precursor chemical exports. Talks in Kuala Lumpur later that year, led by US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer on one side and China’s Vice Premier He Lifeng on the other, produced a deal that cut the fentanyl tariff from 20 percent to 10 percent, bringing the combined rate from 57 percent to 47 percent.
| Date | Development | Rate Change |
| April 2025 | Combined reciprocal and fentanyl tariffs peak | 145% |
| 10 November 2025 | Kuala Lumpur agreement takes effect | Cut to 47% |
| 10 Nov 2025 to 9 Nov 2026 | Reciprocal 10% rate extended, 24% add-on suspended | Held at 10% |
The reciprocal 10 percent rate itself was extended for another year, through 9 November 2026, and a scheduled additional 24 percent tariff was suspended rather than allowed to take effect.
The Supreme Court Struck Down Trump’s IEEPA Tariffs on 20 February 2026
The US Supreme Court ruled on 20 February 2026, in Learning Resources, Inc. v. Trump, that tariffs imposed under the International Emergency Economic Powers Act were unconstitutional, striking down the legal basis for most of the tariffs imposed since 2025.
IEEPA is an emergency-powers statute that the administration had used to impose sweeping tariffs without new legislation from Congress. The ruling reshaped the tariff regime on three fronts:
- The core finding: IEEPA does not grant the president open-ended authority to set tariff rates, since that power belongs to Congress under the Constitution.
- The refund wave: Importers who had already paid IEEPA-based duties filed claims, with roughly $132.5 billion eventually refunded.
- What it did not do: The ruling did not end the tariff regime outright. It forced a shift to a different legal mechanism entirely, covered next.
Section 301 Tariffs Replaced IEEPA as the Legal Basis on 24 July 2026
Section 301 tariffs, a separate and long-standing legal authority tied to formal unfair-trade-practice investigations, took effect as the administration’s new legal basis for China tariffs on 24 July 2026, five months after the Supreme Court’s IEEPA ruling.
Section 301 survives where IEEPA failed because it requires a documented investigation and sits within existing trade law rather than emergency powers. For importers, the practical tariff exposure on many goods changed little in the short term, but the legal foundation underneath it became narrower and considerably harder for a future administration to unwind through a single court challenge. The net effect was continuity of the tariff war through a more procedurally grounded channel.
The US Effective Tariff Rate Hit 6.7% in July 2026, the Highest Since 1947
The average effective US tariff rate reached 6.7 percent in July 2026, up from just 2.3 percent in January 2025, according to Yale Budget Lab tracking, a level separate researchers put at 7.2 percent for the full 2026 calendar year, the highest since 1947.
These two figures describe different things, and the distinction matters for understanding the real cost of the tariff war. The “effective rate” is blended across every dollar of US imports, while the “applied rate” of 11.8 percent covers only the roughly 54 percent of goods actually subject to a tariff line. Both numbers are legitimate, and both are far above the 2.3 percent baseline from before the escalation began.
| Period | Effective Tariff Rate | Note |
| January 2025 | 2.3% | Pre-escalation baseline |
| July 2026 | 6.7% | Yale Budget Lab tracking |
| Calendar year 2026 (estimate) | 7.2% | Highest rate since 1947 |
| Applied rate, covered goods | 11.8% | Covers roughly 54% of US goods imports |
Net tariff revenue collected between January 2025 and July 2026 totaled approximately $166 billion, after the $132.5 billion in IEEPA-related refunds. Full-year 2026 revenue estimates range from $108.5 billion under conventional scoring to $81.2 billion once broader economic effects are factored in.
China Paused Its Rare Earth Export Controls and Rolled Back Agricultural Tariffs Through 10 November 2026
China suspended a new round of rare earth export controls and removed a set of retaliatory agricultural tariffs on US goods, both effective from 10 November 2025 as part of the same Kuala Lumpur agreement.
China had announced expanded export controls on 9 October 2025, covering five additional rare earth elements along with extraterritorial provisions reaching products made outside China using Chinese materials or technology. Beijing’s rollback covered two separate tracks:
- Rare earths: The new controls were paused for one year, to 10 November 2026, rather than withdrawn permanently.
- Agriculture: China’s State Council Tariff Commission removed a 15 percent tariff on chicken, wheat, corn, and cotton, and a 10 percent tariff on sorghum, soybeans, pork, beef, and dairy.
Rare earths are critical inputs for US defense, electric vehicle, and electronics manufacturing, which makes the suspension a direct supply chain relief valve rather than a permanent resolution to the underlying dispute.
Supply Chains Are Reshoring While US Households Pay $820 More a Year
The average US household is paying an estimated $820 more per year in 2026 because of tariffs, down from roughly $1,000 in 2025, as the tariff regime pushed some manufacturers to accelerate reshoring and nearshoring plans.
Broader economic modeling points to three compounding effects:
- GDP: A long-run reduction of 0.4 percent.
- Employment: Roughly 338,000 fewer full-time-equivalent jobs.
- Capital stock: A 0.3 percent reduction in the US capital stock.
Manufacturers facing sustained tariff exposure have responded by diversifying sourcing away from China and, in a growing number of cases, moving production closer to or inside the United States. This cost pressure is not happening in isolation. It sits alongside other global inflation drivers in 2026, including the Russia-Ukraine war’s effect on European energy costs and global inflation, which has separately pushed up energy and food prices across multiple regions at the same time households are absorbing tariff-driven price increases.
The US-China Tariff Truce Expires on 9 November 2026, Reopening the Path to a 24% Rate Increase
The current US-China reciprocal tariff truce is scheduled to expire on 9 November 2026, at which point the suspended 24 percent additional rate and China’s paused rare earth controls are both due to lapse unless the two sides reach a new agreement first.
If the truce is not renewed, the reciprocal tariff could jump back toward the higher rate that was suspended in November 2025, and Beijing’s rare earth export controls could resume in parallel. A longer-term resolution would require both governments to move past a rolling series of one-year truces toward a durable agreement, something neither side has yet committed to in writing. Until that happens, the legal and economic story covered here remains active rather than settled.
Three Phases, One Deadline: The US-China Tariff War Through November 2026
The US-China tariff war has moved through three distinct phases in under two years: an escalation to a 145 percent peak, a legal reversal that forced a change in authority, and a fragile truce now running on borrowed time toward its November 2026 deadline. For continued coverage of how this trade story and its economic ripple effects evolve, explore the full Current Affairs section on Universalnest.
Frequently Asked Questions
Is the US-China trade war officially over?
No. The two sides are operating under a truce that runs through 9 November 2026, not a permanent settlement. Tariffs remain in place under Section 301 authority, and both the reciprocal rate and China’s rare earth pause are set to expire unless renewed.
What was the highest tariff rate the US placed on China?
The combined US tariff rate on Chinese goods peaked at 145 percent in April 2025, stacking reciprocal and fentanyl-related tariffs. This fell to 47 percent after the November 2025 Kuala Lumpur agreement and declined further as the effective rate settled near 6.7 to 7.2 percent through 2026.
Why did the Supreme Court rule against Trump’s tariffs?
In Learning Resources, Inc. v. Trump, decided 20 February 2026, the Court found that the International Emergency Economic Powers Act does not give the president open-ended authority to set tariffs, since that power constitutionally belongs to Congress rather than the executive branch.
What replaced the IEEPA tariffs after the ruling?
Section 301 tariffs, based on formal unfair-trade-practice investigations rather than emergency powers, took effect as the new legal basis on 24 July 2026. This kept most tariffs in place but shifted their authority to a narrower, more procedurally established legal mechanism.
How much are tariffs costing the average US household?
Tax Foundation modeling estimates tariffs cost the average US household about $820 in 2026, down from roughly $1,000 in 2025. The decline reflects both the Supreme Court’s IEEPA ruling and the November 2025 rate reductions under the Kuala Lumpur agreement.
When does the current US-China tariff truce expire?
The reciprocal tariff truce and China’s rare earth export control suspension are both scheduled to expire on 9 November 2026. Unless renewed, the suspended 24 percent additional US tariff and China’s paused export controls could both resume at that point.
1 Comment
Comments are closed.