The United States will lower its tariffs on Chinese goods to 30% for the next 90 days, following a breakthrough agreement with China aimed at halting the intensifying trade war that has threatened the global economy, according to media reports. The move comes as part of a 115% mutual reduction in duties agreed during negotiations in Geneva.
The reduced rate stems from the scaling back of tariffs that were introduced by US president Donald Trump on April 2 and later escalated to 125%. China had responded with equivalent tariffs and additional non-tariff measures, including restrictions on the export of essential minerals used in US high-tech manufacturing.
Speaking after the talks, US treasury secretary Scott Bessent said both delegations had conducted the negotiations with &ldquo;great respect&rdquo; and emphasised the shared goal of maintaining economic ties.&nbsp;
&ldquo;The consensus from both delegations this weekend was neither side wants a decoupling,&rdquo; Bessent stated.
The new 30% US tariff rate incorporates a 20% duty that was already in place before the current trade war. Trump had justified that earlier measure by linking it to China&rsquo;s alleged role in the fentanyl crisis in the US. The fentanyl-related tariff will remain in effect despite the broader reductions.
US trade representative Jamieson Greer said China&rsquo;s response to the initial tariffs had gone beyond equivalency. &ldquo;China&rsquo;s retaliation had been disproportionate and amounted to an effective embargo on trade between the world&rsquo;s two biggest economies,&rdquo; he said.
Chinese tariffs on US goods will be reduced to 10% during the 90-day period. A spokesperson for China&rsquo;s ministry of commerce welcomed the move, saying: &ldquo;This move meets the expectations of producers and consumers in both countries, as well as the interests of both nations and the common interest of the world. We hope that the US side will, based on this meeting, continue to move forward in the same direction with China, completely correct the erroneous practice of unilateral tariff hikes, and continually strengthen mutually beneficial cooperation.&rdquo;
Bessent noted that the talks in Switzerland also saw a marked improvement in China&rsquo;s understanding of the US&rsquo;s opioid crisis. &ldquo;For the first time the Chinese side understood the magnitude of what is happening in the US,&rdquo; he said, expressing confidence in the level of Chinese engagement on the fentanyl issue.
Both governments released a joint statement on Monday, affirming a commitment to &ldquo;continue to advance related work in a spirit of mutual openness, continuous communication, cooperation and mutual respect&rdquo;.
Markets responded swiftly to the news.&nbsp;
The yuan climbed to a six-month high, signalling renewed investor confidence. Up to 16 million jobs in China had been at risk due to the trade dispute, while the US faced mounting inflation and widespread shortages caused by high tariffs on its primary goods supplier.
William Xin, chair of hedge fund Spring Mountain Pu Jiang Investment Management, told a section of the media: &ldquo;The result far exceeds market expectations. Previously, the hope was just that the two sides can sit down to talk, and the market had been very fragile. Now, there&rsquo;s more certainty. Both China stocks and the yuan will be in an upswing for a while.&rdquo;
Hu Xijin, the former editor of nationalist Chinese tabloid, also weighed in, calling the agreement a &ldquo;great victory for China in upholding the principles of equality and mutual respect&rdquo;.&nbsp;
He pointed out on Weibo that the recent UK-US trade agreement had left a 10% tariff on UK imports in place, &ldquo;while the UK did not implement reciprocal measures&rdquo;.
Wang Wen, head of the Chongyang Institute for Financial Studies at Renmin University in Beijing, described the outcome as a notable development. &ldquo;This is an unexpected achievement in Sino-US tariff negotiations,&rdquo; he said.
However, he warned that the deal should not be viewed as a full resolution. &ldquo;It does not represent the resolution of the structural contradictions between China and the United States, nor does it mean that there will be no friction and serious differences between China and the United States in the future.&rdquo;
European markets surged in the wake of the announcement. Germany&rsquo;s DAX index climbed by 1.5%, with major gains for Mercedes-Benz, Daimler Trucks and BMW. France&rsquo;s CAC index rose by 1.2%.
(With inputs from agencies)&nbsp;
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China and US slash tariffs for 90 days, signalling a pause in trade tensions that shook global supply chains

US Cuts China Tariffs to 30% in 90-Day Trade Truce

China and US slash tariffs for 90 days, signalling a pause in trade tensions that shook global supply chains

May 12, 2025 | 16:35 IST