- The United States and China announced on Monday that they have reached an agreement to temporarily reduce reciprocal tariffs as the world’s two largest economies aim to resolve a trade war that has disrupted the global economic outlook and unsettled financial markets.
- Speaking after discussions with Chinese officials in Geneva, US Treasury Secretary Scott Bessent informed reporters that both sides had agreed to a 90-day suspension of measures and that tariffs would be lowered by over 100 percentage points to 10%.
- “Both countries represented their national interests very well,” Bessent stated. “We both have an interest in balanced trade, and the US will continue to move towards that goal.”
- Bessent was speaking alongside US Trade Representative Jamieson Greer following the weekend talks, during which both sides acknowledged progress in narrowing their differences.
- The Geneva meetings marked the first in-person interactions between senior US and Chinese economic officials since US President Donald Trump’s return to power and his subsequent implementation of widespread tariffs, with particularly significant duties imposed on China.
- Since assuming office in January, Trump has increased the tariffs paid by US importers for goods from China to 145%, in addition to the tariffs he imposed on numerous Chinese goods during his first term and the duties levied by the Biden administration.
- China responded by imposing export restrictions on certain rare earth elements, crucial for US manufacturers of weapons and electronic consumer goods, and by raising tariffs on US goods to 125%.
- The tariff dispute effectively halted nearly $600 billion in two-way trade, causing disruptions to supply chains, raising fears of stagflation, and leading to some job losses.
- Financial markets have been closely monitoring for any signs of de-escalation in the trade war. On Monday, Wall Street stock futures rose, and the dollar strengthened against safe-haven currencies as the talks boosted hopes that a global recession might be averted.
US and China Agree to Temporary Tariff Reduction to Ease Trade War
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