The US and China have reached an agreement to drastically reduce tariffs. They will initially be paused for 90 days. The joint statement by representatives of the two countries comes after two days of talks in Geneva, during which "significant progress” was achieved.
US and China reduce tariffs by 115%
By May 14, the US will reduce tariffs imposed on China from 145% to 30%, and China will reduce those imposed on the United States from 125% to 10%. Beijing and Washington have reached an agreement to create a mechanism through which discussions on economic and trade relations between the two countries can continue. The discussions will be held in both the United States and China or in a third country - depending on the agreement between the representatives of the two countries, the joint statement said.
The meetings in Geneva were direct talks between high-ranking American and Chinese economic representatives, since the beginning of the second term of US President Donald Trump, who has launched a global tariff campaign, imposing particularly high tariffs on China.
How the market reacted
Stocks rose after the announcement of the tariff reduction, fueling hopes that China and the United States will abandon the confrontation that has shaken world markets. Oil prices jumped more than three percent on speculation that the reduction of tensions between China and the United States will help demand. Gold, which rose last month as investors sought to secure themselves with the precious metal, is losing value. The U.S. dollar rose more than 1% against the yen and the euro on Monday after China and the U.S. cut tariffs for a 90-day period, easing tensions between the economic superpowers.
How it got here
Since taking office in January, Trump has raised tariffs paid by U.S. importers of goods from China to 145%, on top of tariffs he imposed on many Chinese goods during his first term and tariffs imposed by the Biden administration. China retaliated by imposing restrictions on exports of some rare earth elements, vital to American arms and electronics manufacturers, and raising tariffs on American goods to 125%.
The tariff dispute has halted nearly $600 billion in bilateral trade, disrupting supply chains, raising fears of stagflation and leading to some job cuts.