The US and China said on Monday they have agreed to a trade deal to slash reciprocal tariffs for now. The world’s two biggest economies seek to end a trade war that has disrupted the global outlook and set financial markets on edge.
The announcement was made in a joint statement that came after a weekend of continuous trade negotiations by both parties in Geneva. U.S. Treasury Secretary Scott Bessent told reporters the parties had agreed on a 90-day pause on measures.
Reducing Trade Deficit
As per the joint statement, by May 14, the US will temporarily lower its tariffs on Chinese goods from 145% to 30%. China, on the other hand, will cut its levies on American imports from 125% to 10%, CNN reported.
“Both countries represented their national interest very well,” Bessent said. “We both have an interest in balanced trade, the US will continue moving towards that.
Bessent was speaking alongside US Trade Representative Jamieson Greer after the weekend talks in which both sides had hailed progress on narrowing differences.
Greer added, “The deal we struck with our Chinese partners would help reduce the US’s $1.2tn (£901bn) trade deficit”, as reported in the BBC.
First In-Person Interaction
The Geneva meetings were the first face-to-face interactions between senior US and Chinese economic officials since US President Donald Trump returned to power and launched a global tariff blitz, imposing particularly hefty duties on China.
Since taking office in January, Trump has hiked the tariffs paid by US importers for goods from China to 145%. This was in addition to those he imposed on many Chinese goods during his first term and the duties levied by the Biden administration.
China hit back by putting export curbs on some rare earth elements, vital for US manufacturers of weapons and electronic consumer goods, and raising tariffs on US goods to 125%.
The tariff dispute brought nearly $600 billion in two-way trade to a standstill in US and China, disrupting supply chains, sparking fears of stagflation and triggering some layoffs.
Financial markets have been looking out for signs of a thaw in the trade war and Wall Street stock futures climbed and the dollar firmed against safe haven peers on Monday as the talks boosted hopes a global recession might be avoided.
(with inputs from Reuters)
