The United States and China have agreed to temporarily slash tariffs on each other’s goods by a staggering 115%. The decision comes after a series of intense trade negotiations held in Geneva, Switzerland, and marks a notable shift in the ongoing trade war.
Under the terms of the agreement, which will last for 90 days, the US will reduce its tariffs on Chinese goods from an eye-watering 145% to 30%, while China will lower its tariffs on American products from 125% to just 10%.
The reduction includes the tariffs initially tied to fentanyl, one of the key points of contention during the talks. This move is expected to offer some relief to the industries and consumers impacted by the tariffs, including the American agriculture and manufacturing sectors, which have faced substantial challenges since the trade war began.
Both sides have emphasized the temporary nature of the agreement. While these cuts are set to expire in three months, they provide a critical window for both nations to resolve their economic differences without further escalation.
“This agreement allows us time to continue discussions on issues like fentanyl and the broader trade imbalance between our countries,” said Treasury Secretary Scott Bessent.
The US government has made it clear that the ultimate goal is to achieve a more balanced trade relationship with China.
The move also highlights China’s commitment to easing the economic strain caused by retaliatory tariffs. According to a joint statement, China will take steps to suspend or remove the non-tariff measures it imposed on American goods since President Trump’s April 2 announcement of the initial tariffs.
Both countries have expressed their commitment to continuing talks, with discussions set to continue under the leadership of key officials such as Chinese Vice Premier He Lifeng and US Trade Representative Jamieson Greer.
Despite the positive sentiment surrounding this agreement, the road to a lasting resolution remains uncertain.
Previous rounds of negotiations have seen temporary deals fall apart, most notably in 2018, when a similar truce was soon undermined by further tariffs and unmet commitments. The trade deficit between the US and China surged during the pandemic, exacerbating tensions, and many experts are cautious about whether this agreement will lead to meaningful, long-term changes.
Still, the announcement has brought relief to markets, with Chinese stocks rebounding following the news. Investors are hopeful that this agreement represents the first step toward a more stable and predictable trading environment.
However, with past trade deals failing to produce lasting results, many are taking a wait-and-see approach, aware that the road ahead is likely to remain rocky.
As the world watches, this temporary reduction in tariffs offers a glimmer of hope for both nations, and for the global economy, hoping to avoid a prolonged trade war that could have far-reaching consequences.