U.S., China reach deal to temporarily end tariff battle: How this will impact Virginia

RICHMOND, Va. (WRIC) -- On Monday, May 12, China and the U.S. agreed to end their recent tariff battle temporarily and restart stalled trade between the two countries.

However, even with the pause in place, tariffs are left higher than before due to President Donald Trump previously raising them in April, according to the Associated Press (AP).

The announcement came during a news conference in Geneva, Switzerland.

U.S. trade representative Jamieson Greer told the AP that the U.S. agreed to drop the tax Trump imposed in April from 145% to 30%. In turn, China agreed to lower its tariff rates on U.S. goods from 125% to 10%. This pause is set to last 90 days.

The tariff battle began in February, when Trump signed an executive order to impose tariffs on imports from Canada, China and Mexico. Additional 25% tariffs were also placed on all EU imports.

Virginia gets $1.8 million in imports from China. Since the implementation of the tariffs, economists have warned that prolonged tariffs could trigger statewide job losses in Virginia.

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According to Virginia Business, for the Port of Virginia, China is a key partner. The port's 2024 report showed that China was its top import partner and the second-ranked export partner.

The Port of Virginia ranks sixth nationwide for shipping traffic and, in fiscal year 2024, it processed $3.5 million in 20-foot equivalent units of shipping traffic.

"The effects of tariffs are cascading ... If tariffs last a month, they would have minimal impact on the state’s economy, but if they linger for a year or more, the consequences throughout the commonwealth could be substantial," Robert McNab, Chair of Old Dominion University's economic department, told Virginia Business.

When it comes to the impact of local businesses, those that sell goods or use materials imported from China will be most impacted by the recent tariffs. Those goods include toys, smartphones, lithium-ion batteries and portable computers from China. According to Virginia Business, nearly 80% of these products come from China.

Although Virginia and the United States have become more self-reliant and have recovered from the tariff war in 2018, experts say, their labor pool is not as large as China's.

For individuals wondering how the tariffs will affect the average American, the immediate impact will be in the car industry, followed by groceries and then gas, according to McNab.

"The first immediate impact is going to be on the car industry, because car supply chains stretch across international borders, and supply disruptions to the industry will quickly lead to car plants shutting down for the lack of parts. We'll then see the price of fruits and vegetables start to increase in grocery stores, followed by goods such as tequila from Mexico. And then, of course, we'll start to see the price at the pump start to rise. The price of your iPhone, car speakers, TVs will start to increase as the tariffs take a bite. And of course, we can't forget that other countries are levying tariffs and retaliation, and so the goods we export will decline. So, you're getting two effects: you're getting prices increasing and exports slowing, so that can lead to lower employment and job growth." Professor Robert McNab, Old Dominion University

Although the topic of tariffs has brought about much confusion and frustration for Americans, following the 90-day tariff pause, stocks such as S&P have shot up 3.3% to pull back within 5% of their all-time high set in February, per the AP. The Dow Jones Industrial Average jumped 1,160 points, or 2.8%, and the Nasdaq composite climbed 4.3%.

According to Jonathan Pingle, U.S. chief economist at Union Bank Switzerland (UBS), this move could also add 0.4 percentage points to the U.S. economy’s growth this year.

The nearly three-month pause also comes in time for back-to-school time for students, which experts say will help “ensure that shelves are stocked for the all-important back-to-school and holiday shopping seasons."

Details on the permanent future for the U.S. and China, Canada, Mexico and EU countries are still unknown and subject to change.

This is a developing story, stay with 8News for more updates.