Tariff tensions escalated rapidly between February and April

Before both sides arrived at an agreement in Geneva, they have imposed cumulative tariffs of over 100% on each other’s goods, significantly disrupting cross-border commodity trade and industrial supply chains.

The tariff confrontation accelerated sharply beginning in early February 2025 and peaked in April. Within just ten weeks, both countries raised tariffs on each other’s goods through a series of overlapping executive actions and retaliatory measures. By mid-April, total duties had reached extreme levels—over 100% on both sides—fueling severe trade uncertainty and logistical disruption across industrial supply chains.

Apart from tariff related measures, China has also imposed multiple non-tariff retaliatory measures against the US, ever since the confrontation initiated:

1. Export controls: Imposed export restrictions on key strategic metals including tungsten, tellurium, bismuth, molybdenum, and indium.

2. Unreliable entity list: Added multiple US companies to the Unreliable Entity List, notably Google, Illumina, etc.

3. Anti-monopoly investigations: Launched antitrust probes into US corporations operating in China, such as DuPont China.

4. Import qualification suspensions: Revoked or suspended import licenses for certain American companies, affecting sorghum, poultry, and related agricultural goods.

US-China Geneva talks deliver a pause, not a resolution

The Geneva agreement signed on May 12 includes the following terms:

1. The United States will suspend 24% of its latest tariffs for 90 days, maintaining a base rate of 10%, which results in a net tariff rate of 30% on Chinese goods (down from 145%).

2. China will suspend 24% as well, leaving its residual tariff at 10% on US goods (down from 125%). Additionally, China agreed to pause non-tariff countermeasures introduced since April.

3. Both sides will cancel the most recent administrative rounds: EO 14259 and 14266 for the US, and Announcements No. 5 and 6 for China.

All terms under the agreement will take effect on May 14. During the 90-day window from May 14 to August 12, China will reduce its tariffs on U.S. goods to 10%, with rates scheduled to revert to 34% thereafter. Conversely, the United States will impose a 30% tariff on all Chinese goods during the same period, which is set to return to 54% after August 12, unless further arrangements are made.

Although the outcome has brought positive sentiment to the market, we should note that the agreement barely marks a tactical pause for the current situation rather than a true resolution. Beyond the synchronized reduction of certain tariffs, the joint statement offers no other substantial progress.

Both governments retain leverage: tariffs are reduced yet not removed, which leaves further room and time for another round of negotiation. Structural disputes around industrial policy, critical minerals, and security of supply chains remain unresolved. The remaining language from the statement, regarding the establishment of a mechanism for continued consultations, suggests the possibility for further negotiations to take place, which could take place at any time, rather than being confined to the post–90-day window. However, at the current stage, comparing with a true negotiation to give birth to a mutually agreed solution, we are really still at the stage of "reciprocal adjustments".

Does the Truce Really Reopen the Door for Red Dog Imports?

Red Dog mine, operated by Canadian mining giant Teck Resources, has long been the world’s largest zinc concentrate producer and has consistently served as the only US based supplier of zinc concentrate to the Chinese market. In 2024, Red Dog mine produced approximately 560,000 tonnes of zinc in concentrate and 110,000 tonnes of lead in concentrate, accounting for roughly 5% of global zinc output and 2.5% of global lead production, with its 2025 guidance stands at 450,000 tonnes of zinc in concentrate and 95,000 tonnes of lead in concentrate. Currently, over 20% of Teck's zinc concentrate sales are directed to Chinese smelters. Earilier in 2025, Teck had signed annual long-term contracts with Chinese smelters Nanfang Nonferrous Metals Group and China Minmetals Corp’s Zhuzhou Smelter Group, collectively covering over 100,000 tonnes of zinc in concentrate.

Later, China’s April retaliation (raising tariffs on US goods from 84% to 125%) directly hitted US-origin zinc ore. At a tariff rate as high as 125%, importing US concentrate became prohibitively expensive, and Chinese smelters immediately balked at taking Red Dog’s material. Teck Resources’ commercial team has remained in active negotiations with its Chinese customers since the tariffs were imposed. However, based on current information, Chinese buyers have been reluctant to absorb the full tariff costs on Red Dog’s imported concentrate, prompting Teck to explore alternative options, including redirecting the material to other markets.

Seemingly, the reduction of China’s tariff on US goods to 10% is a positive development, suggesting that zinc concentrate from Red Dog is no longer subject to prohibitively high duties. Back during Trump’s first administration, China imposed a 25% tariff on US-origin zinc concentrate and 10% on lead; at that time, Teck and its Chinese customers split the cost, allowing shipments to continue despite the added burden.

However, as noted in Teck’s Annual Information Form, the shipping season at Red Dog is limited to approximately 100 days per year from early July through the end of October, due to sea ice conditions. Within this window, Teck typically dispatches its entire annual output of zinc concentrate to customers across Asia, Australia, and Europe, with the balance sent to its Trail metallurgical complex in British Columbia, Canada. According to Bloomberg, a company spokesperson also confirmed that no shipments are expected to commence before July.

Between July and October, when Arctic sea routes are navigable, shipments from the Red Dog mine’s port to major Chinese destinations—such as Lianyungang, Fangchenggang, and Shanghai—typically take over a month, including customs clearance upon arrival. This raises the possibility that the concentrates may miss the 90-day tariff window and fail to clear Chinese customs before the August 12 deadline, after which the tariff rate is set to revert to 34%.

It remains uncertain how Teck intends to navigate this timing constraint, or whether the current truce will meaningfully change trade flows. SMM will continue to closely monitor developments as the situation evolves.

Downstream holds its breath amid policy uncertainties

In terms of downstream exports, galvanized sheet shipments to the North American market account for only around 1% of China’s total exports. However, dependence on the U.S. remains significant for finished goods. In 2024, the United States remained China’s largest single-country trading partner, with 16.2% of Chinese auto parts and 18.3% of home appliance exports destined for the U.S. market. The temporary suspension of the 24% tariff opens up room for increased exports of galvanized structural components, galvanized sheet, and finished products to the U.S., and is likely to trigger a short-term surge in exports. This may provide a modest boost to zinc demand in the near term.

Based on SMM’s conversations with market participants, however, at the time when this article is written, Chinese downstream remain hesitant to take any immediate action despite the apparent tariff relief. With limited clarity on whether the current 10% tariff rate will hold and how long it will hold, market participants remain reluctant of making forward commitments. Given the frequent shifts in recent trade policy, for now, most players are cautious and taking a wait-and-see approach. SMM will continue to monitor how downstream export orders alter and provide timely updates as the situation unfolds.

Author: Yueang He, Zinc & Lead Analyst Contact: yueanghe@smm.cn | +44 (0)7522 173725