In a notable move towards easing economic tensions, the United States and China have reached a provisional agreement to significantly lower tariffs that both nations had imposed during their trade conflict. This breakthrough was announced after two days of high-level discussions in Geneva, Switzerland, with both sides expressing optimism about the results.
A 90-Day Tariff Relief Period
U.S. Treasury Secretary Scott Bessent stated that both countries will reduce reciprocal tariffs for an initial 90-day period starting May 14. The agreement involves the U.S. cutting its tariffs on Chinese goods from 145% to 30%, while China will decrease its duties on certain American imports from 125% to 10%, as reported by BBC. These measures were welcomed on social media by U.S. Secretary of State Marco Rubio, marking a significant pause following months of tensions that had disrupted financial markets and sparked fears of a global recession. U.S. officials had previously described the tariffs as "tantamount to an embargo."
Economic Impact and Reactions
The trade war had resulted in a steep decline in bilateral trade, evident in the reduced maritime traffic from Chinese ports to the U.S., as well as a slowdown in Chinese manufacturing output, leading to mass layoffs in export-driven industries. "The consensus between both delegations is that neither side desires a decoupling," Bessent remarked at the conclusion of the talks. "We want trade, but more balanced trade," he added, as quoted by the White House.
Meanwhile, China's Ministry of Commerce described the agreement as a crucial step towards "resolving differences and deepening cooperation," according to the EFE news agency.
Framework for Future Negotiations
The agreement includes the establishment of a bilateral trade dialogue mechanism, spearheaded by Scott Bessent and Chinese Vice Premier He Lifeng, to monitor structural differences and facilitate further negotiation rounds. Future talks could be held in either the U.S. or China. Both nations acknowledged the importance of their economic relationship not only for domestic interests but also for global economic stability.
Indeed, the EFE reported that Chinese stock markets closed positively on Monday following the announcement of the temporary trade pact, which exceeded expectations for the first contact between the two powers since the tariff escalation initiated by Donald Trump.
Key Questions About the U.S.-China Trade Agreement
What are the main terms of the U.S.-China trade agreement?
The agreement entails a reduction in tariffs by the U.S. from 145% to 30% on Chinese goods, and by China from 125% to 10% on certain American imports for an initial period of 90 days starting May 14.
Why is the trade agreement considered significant?
The agreement is seen as a pivotal step in easing economic tensions between the two nations, which had caused market turmoil and fears of a global recession due to the high tariffs previously imposed.
How will future negotiations be handled according to the agreement?
The agreement establishes a bilateral dialogue mechanism led by officials from both countries, aimed at addressing structural differences and facilitating further negotiation rounds, which may occur in the U.S. or China.