China says U.S. agreed to cap replacement tariffs on Chinese goods at 20%

China’s Ministry of Commerce announced on July 27, 2026, that the U.S. had committed during bilateral trade talks to cap replacement tariffs on Chinese goods at 20%. The current replacement tariff rate stands at 12.5%, leaving 7.5 percentage points of headroom for further increases before reaching the stated ceiling. The disclosure follows the Trump administration’s recent imposition of new levies, which replaced global duties of 10% that expired on July 24. These new tariffs were framed as part of a broader protectionist push after the U.S. Supreme Court struck down earlier levies. The U.S. has also initiated a separate investigation into China, citing alleged overcapacity in its manufacturing sector, which could lead to additional duties. China emphasized it would monitor U.S. actions closely and reserved the right to take countermeasures, while urging Washington to remove unilateral tariffs and resolve differences through dialogue. The announcement signals a tentative easing of trade tensions, aided by a truce that has seen U.S. levies drop from a peak of 145% last year to around 30% earlier this year, before reductions following Supreme Court rulings. The current truce, agreed during a summit between Presidents Donald Trump and Xi Jinping in South Korea and set to expire in November unless extended, has led to the suspension of some tariffs, restrictions on rare earth exports, and investigations into China’s shipbuilders. China has previously indicated it would accept some increase in U.S. tariffs to levels negotiated last year while continuing talks to extend the trade truce.