In a significant shift towards economic détente, the United States and China reached a temporary agreement to substantially reduce the tariffs that both parties had imposed during their trade war.
The agreement was announced after two days of discussions in Geneva, Switzerland, between high-level delegations from both countries, and the results were described as positive by both sides.
A provisional relief of 90 days
According to U.S. Treasury Secretary Scott Bessent, both nations will reduce their reciprocal tariffs over an initial period of 90 days, starting May 14.
The agreement implies that the U.S. will reduce its tariffs on Chinese products from 145% to 30%, while China will lower its duties on certain U.S. imports from 125% to 10%, stated BBC.
These measures, celebrated on X by Marco Rubio, the U.S. Secretary of State, represent a significant pause following months of tensions that caused turmoil in financial markets and fueled fears of a global recession. The tariffs imposed earlier had been described by U.S. officials as “the equivalent of an embargo.”
Economic impact and reactions
The trade war had caused a drastic decline in bilateral trade, reflected in the reduction of maritime traffic from Chinese ports to the U.S., as well as a slowdown in Chinese manufacturing production, with massive layoffs in exporting industries.
“The consensus of both delegations is that neither party wants a decoupling,” Bessent stated at the conclusion of the talks. “We want trade, but a more balanced trade,” he added in words captured by the White House.
On its part, the Chinese Ministry of Commerce described the agreement as a crucial step to “resolve differences and deepen cooperation,” according to the agency EFE.
A mechanism is established for future negotiations
The agreement includes the establishment of a bilateral commercial dialogue mechanism, led by Scott Bessent himself and Chinese Vice Premier He Lifeng, which will allow for monitoring structural differences and facilitating new rounds of negotiations. Future discussions may take place both in the U.S. and in China.
Both countries recognized the importance of their economic relationship not only for their national interests, but also for the stability of the global economy.
In fact, EFE noted that the Chinese markets closed positively this Monday following the announcement of a temporary trade agreement that surpassed expectations for the first contact between both powers after the tariff escalation initiated by Donald Trump.
Frequently Asked Questions about the Trade Agreement between the United States and China
What does the temporary trade agreement between the United States and China involve?
The temporary agreement between the United States and China consists of a substantial reduction in tariffs that both nations had imposed during the trade war. This agreement will last for 90 days and will begin on May 14, 2025. The United States will reduce its tariffs from 145% to 30% on Chinese products, while China will decrease its taxes from 125% to 10% on certain American imports.
What is the economic impact of the trade war between the United States and China?
The trade war caused a drastic drop in bilateral trade, reflected in the decrease in maritime traffic and a slowdown in manufacturing production in China, with massive layoffs in export industries. The tariff tensions also caused turmoil in financial markets, fueling fears of a global recession.
How will future trade negotiations between the United States and China be conducted?
The agreement includes the establishment of a bilateral commercial dialogue mechanism, led by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. This mechanism will allow for monitoring structural differences and facilitate new rounds of negotiations, which can take place in both the U.S. and China.
What reactions have there been to the trade agreement between the United States and China?
The agreement has been celebrated by both countries as a crucial step towards resolving differences and enhancing cooperation. According to Scott Bessent, "neither side wants a decoupling". Chinese stock markets closed positively following the announcement of the pact, exceeding initial expectations.
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