The United States and China have announced that they have reached a deal to reduce reciprocal tariffs temporarily, as the world’s two largest economies work to resolve a trade war that has unsettled the global economic outlook and rattled financial markets.
Speaking after discussions with Chinese officials in Geneva, US Treasury Secretary Scott Bessent told reporters that the two nations had agreed on a 90-day pause on tariff measures, with tariffs set to drop 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 moving towards that.”
Following the announcement, the dollar strengthened against major currencies, and financial markets rallied, easing concerns of a potential economic downturn triggered last month when US President Donald Trump intensified tariff measures aimed at reducing the US trade deficit.
Bessent addressed the media alongside US Trade Representative Jamieson Greer after the weekend talks in Switzerland, where both sides noted progress in narrowing their differences. “The consensus from both delegations this weekend is that neither side wants a decoupling,” Bessent said. “The previous high tariffs amounted to an embargo, and neither side desires that. We want trade.”
The Geneva discussions marked the first direct engagement between senior US and Chinese economic officials since Trump returned to office and initiated a global tariff campaign, particularly targeting China.
Since taking office in January, Trump had increased tariffs on Chinese imports to 145%, adding to the levies introduced during his first term and those imposed by the Biden administration. In response, China introduced export restrictions on key rare earth elements vital for US manufacturers of weapons and electronics, while also raising tariffs on US goods to 125%.
The trade conflict had stalled nearly $600 billion in bilateral trade, disrupting supply chains, raising fears of stagflation, and leading to some job losses. Financial markets responded positively to the latest development, with Wall Street stock futures rising amid hopes that a global recession could be averted.
“This outcome is better than I expected. I thought tariffs would be cut to around 50%,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong. “This is undoubtedly good news for both economies and the global economy, reducing investors’ fears about short-term disruptions to global supply chains.”
After Sunday’s talks, US officials praised the agreement as a step towards reducing the trade deficit, while Chinese officials described it as an “important consensus” and announced plans for a new economic dialogue forum.
President Trump offered a positive assessment before the talks concluded, describing the negotiations as “a total reset… in a friendly, but constructive, manner.”
The tariff measures were partly introduced after Trump declared a national emergency over fentanyl entering the United States. Greer noted that discussions around controlling the deadly opioid were “very constructive” but took place on a separate track.
Chinese Vice Premier He Lifeng, speaking from the Swiss ambassador’s private villa overlooking Lake Geneva, also welcomed the progress, though he was more reserved in his remarks, describing the talks as yielding “substantial progress.”
Boluwatife Enome
Follow us on:
