The United States and China have agreed to a deal to temporarily cut reciprocal tariffs as the world's two largest economies try to end a destructive trade war that has scared fear of the recession and put financial markets at a strength.
U.S. Treasury Secretary Scott Bessent said after talks with Chinese officials in Geneva that the two sides have agreed to a 90-day pause, with tariffs set to be cut by more than 100 percentage points to the benchmark interest rate 10%.
“Both countries represent their national interests well,” Bessent said on Monday. “We both have an interest in balancing trade and the United States will continue to move towards that.”
The dollar cashed in on major currencies and markets after the news, which helped ease concerns over the escalation of tariff measures aimed at narrowing the U.S. trade deficit last month.
U.S. negotiators said that while no details were provided, two days of intense trade negotiations with China made “substantial progress” and claimed the deal was coming. Beijing has put forward a more reserved tone, but does call the negotiations “substantive.”
Bessent spoke with U.S. Trade Representative Jamieson Greer after the weekend's talks in Switzerland, where both sides praised the progress of the difference.
“The consensus between the two delegations this weekend is not expected to be a coupling,” Becente said. “And what happened to these very high tariffs… is equivalent to an embargo, both sides want it. We do want trade.”
The Geneva meeting was the first face-to-face interaction between senior U.S. economic officials, especially imposing major tariffs on China since U.S. President Donald Trump took power and launched a global tariff blitz.
Since taking office in January, Trump has also raised tariffs paid by U.S. importers from Chinese goods to 145%, in addition to those tariffs he imposed on many Chinese goods during his first term and the duties imposed by the Biden administration.
China has been vital to U.S. weapons and consumer electronics manufacturers by putting export restrictions on some rare earth elements and has raised U.S. goods tariffs to 125%.
The tariff dispute has put nearly $600 billion in two-way transactions to a halt, damaging supply chains, raising concerns about stagnation and triggering some layoffs.
The latest meltdown in the trade war and Wall Street stock futures has brought the driving force toward financial markets, and as negotiations grow, one hopes to avoid a global recession.
“This is better than I expected. I think the tariffs will be cut to about 50%.” Zhang, chief economist at Pinpoint Asset Management in Hong Kong, said: “
Zhang added: “Obviously, this is very positive news for both countries and the global economy and has reduced investors' attention to the damage to global supply chains in the short term.”
U.S. officials touted a “deal” to reduce U.S. trade deficits, while Chinese officials said the two reached “important consensus” and agreed to launch another new forum for economic dialogue.
Trump had a positive understanding of the negotiations before the end, saying the two sides had negotiated “a reset in a friendly but constructive way…”.
The U.S. president partially imposed tariffs after declaring a national emergency in which fentanyl enters the U.S., and Greer said the dialogue to curb deadly opioids was “very constructive”, albeit on another track.
The Chinese Vice Prime Minister's declaration is not very clear, but it is still subject to “substantial progress” after talks held at the private villa of the Swiss ambassador to the United Nations, overlooking Lake Geneva.
