US and Chinese officials said on Monday they had reached a deal to roll back most of their recent tariffs and call a 90-day truce in their trade war for more talks on resolving their trade disputes.
Stock markets rose sharply as the two major economic powers took a step back from a clash that has unsettled the global economy. US Trade Representative Jamieson Greer said the US agreed to drop its 145 per cent tariff rate on Chinese goods by 115 percentage points to 30 per cent, while China agreed to lower its rate on US goods by the same amount to 10 per cent.
Greer and Treasury Secretary Scott Bessent announced the tariff reductions at a news conference in Geneva. The two officials struck a positive tone as they said the two sides had set up consultations to continue discussing their trade issues. Bessent said the high tariffs would have meant a complete blockage of each side’s goods, an outcome neither side wants.
China’s Commerce Ministry said the two sides agreed to cancel 91 per cent in tariffs on each other’s goods and suspend another 24 per cent in tariffs for 90 days, bringing the total reduction to 115 percentage points. The ministry called the agreement an important step for the resolution of the two countries’ differences.
The joint statement issued by the two countries said China also agreed to suspend or remove other measures it has taken since April 2 in response to the US tariffs. China has increased export controls on rare earths, including some critical to the defence industry, and added more US firms to its export control and unreliable entity lists, restricting their business with and in China.
Rollback of levies
US to drop its 145% tariff rate on Chinese goods to 30%
China to lower its rate on US goods by same amount to 10%
Trump had in April raised US tariffs on China to 145%
China retaliated by hitting US imports with a 125% levy
The full impact on the complicated tariffs and other trade penalties enacted by Washington and Beijing remains unclear. And much depends on whether they will find ways to bridge longstanding differences during the 90-day suspension. Bessent said in an interview with CNBC that US and Chinese officials will meet again in a few weeks.
But investors rejoiced as trade envoys from the world’s two biggest economies blinked, finding ways to pull back from potentially massive disruptions to world trade and their own markets.
Futures for the S&P 500 jumped 2.6 per cent and for the Dow Jones Industrial Average was up 2 per cent. Oil prices surged more than USD 1.60 a barrel and the US dollar gained against the euro and the Japanese yen.
Trump last month raised US tariffs on China to a combined 145 per cent, and China retaliated by hitting American imports with a 125 per cent levy. Tariffs that high essentially amount to the two countries boycotting each other’s products, disrupting trade that last year topped USD 660 billion.
The announcement by the US and China sent shares surging, with US futures jumping more than 2 per cent. Hong Kong’s Hang Seng index surged nearly 3 per cent and benchmarks in Germany and France were both up 0.7 per cent.
The Trump administration has imposed tariffs on countries worldwide, but its fight with China has been the most intense. Trump’s import taxes on goods from China include a 20 per cent charge meant to pressure Beijing into doing more to stop the flow of the synthetic opioid fentanyl into the United States.
