U.S. and China Reach Deal to Temporarily Slash Tariffs
The United States and China said Monday they reached an agreement to temporarily reduce the punishing tariffs they have imposed on each other while they try to defuse the trade war threatening the world’s two largest economies.
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In a joint statement, the countries said they would suspend their respective tariffs for 90 days and continue negotiations they started this weekend. Under the agreement, the United States would reduce the tariff on Chinese imports to 30 percent from its current 145 percent, while China would lower its import duty on American goods to 10 percent from 125 percent.
“We concluded that we have a shared interest,” said Treasury Secretary Scott Bessent at a news conference in Geneva where U.S. and Chinese officials met over the weekend. “The consensus from both delegations is that neither side wanted a decoupling,” he said.
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China said it will suspend or revoke countermeasures adopted in retaliation for escalating tariffs. In early April, the Chinese government had ordered restrictions on the export of rare earth metals and magnets, critical components used by many industries, including automakers, aerospace manufacturers and semiconductor firms.
Mr. Bessent said the two countries may discuss purchase agreements of American goods by the Chinese government. Such a deal could help narrow the American trade deficit with China.
The agreement, for now, breaks an impasse that had brought much trade between China and the United States to a halt. Many American businesses had suspended orders, holding out hope that the two countries could strike a deal to lower the tariff rates. Economists have warned that the trade dispute will slow global growth, fuel inflation and create product shortages, potentially tipping the United States into a recession.
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Chinese factories also experienced a sharp decline in export orders to the United States, heaping additional pressure on a sluggish economy. Chinese producers looked to expand trade to Southeast Asia and other regions to circumvent the U.S. tariffs.
Mr. Bessent said the tariffs had effectively created an embargo, something neither side wanted. The two countries said that ongoing negotiations will involve Mr. Bessent, Mr. Greer and He Lifeng, China’s vice premier for economic policy, who led the weekend talks for the Chinese.
Even a temporary reprieve from the shockingly high tariffs is cause for celebration for businesses in both countries. But the tariffs’ repercussions will linger. Businesses will likely encounter a flood of pent-up demand, leading to soaring transport prices, as companies race to schedule shipments during the 90-day negotiating window to take advantage of the lower tariff rates.
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Global markets jumped on the announcement. The benchmark index in Hong Kong surged 3 percent, about the same amount as S&P 500 stock futures.
Zhiwei Zhang, the president and chief economist of Pinpoint Asset Management, an investment firm in Hong Kong, called the agreement a “good starting point” for both countries.
“From China’s perspective, the outcome of this meeting is a success, as China took a tough stance on the U.S. threat of high tariffs and eventually managed to get the tariffs down significantly without making concessions,” he said.
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Mr. Bessent and Jamieson Greer, the United States Trade Representative, said the two countries had substantive discussions on U.S. demands that Beijing crack down on the trafficking of the chemical ingredients used to make fentanyl. Mr. Bessent said the Chinese “understood the magnitude” of the fentanyl crisis in the United States and that there is a “positive path forward.”
Mr. Trump initially added a 20 percent tariff to Chinese exports, accusing the country of not doing enough to stop the flow of fentanyl to the United States. That punitive tariff remains in place.
Mr. Greer said the negotiations were underscored by “mutual understanding and mutual respect,” but noted that China was the only country to retaliate against the United States after President Trump imposed so-called reciprocal tariffs on dozens of countries last month.
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The Trump administration has accused China of unfairly subsidizing key sectors of its economy and flooding the world with cheap goods. Mr. Trump has said China has been “ripping off” the United States for decades with unfair trade practices that have decimated America’s manufacturing sector and cost the country jobs.
In laying out the agreement, Mr. Bessent and Mr. Greer were careful not to antagonize China, instead placing most of the blame for the trade war on the Biden administration for neglecting the trade imbalance.
Mr. Bessent raised the possibility that the two countries could help each other by balancing their economies, saying America could restore manufacturing while China could scale back overproduction in its manufacturing sector.
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The two sides have sparred in public in recent weeks. The White House repeatedly said it was speaking with Chinese officials, while Beijing denied that such talks were taking place.
Initially, Beijing took a hard line to Mr. Trump’s punitive tariffs. Last month, Mao Ning, a senior Chinese Foreign Ministry spokeswoman, posted on X a video of a speech that Mao Zedong made during the Korean War — known in China as the War to Resist U.S. Aggression and Aid Korea — in which he declared, “No matter how long this war is going to last, we’ll never yield.”
China has carefully framed its involvement in the Geneva negotiations not as a concession to Mr. Trump’s tariffs, but as a necessary step to avoid further escalation. China’s Ministry of Commerce said the agreement was “in the interests of both countries and the common interests of the world” and that it hoped that the United States would “continue to work with China to meet each other halfway.”
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Since the tariffs were announced, China has taken many punitive measures against the United States. It suspended imports of sorghum, poultry and bonemeal from American companies and added 27 firms to the list of companies facing trade restrictions.
On Monday, even as China agreed to roll back punitive measures it has imposed over the past month, multiple Chinese agencies, including the Ministry of Commerce and the Ministry of State Security, met to discuss how to strengthen export controls of strategic minerals.
In a statement, the European Chamber of Commerce in China said it was “encouraged” by the announcement, but that “uncertainty remains” because the tariffs are only temporarily suspended.
President Jens Eskelund, president of the European Chamber, said it “hopes to see both sides continue to engage in dialogue to resolve differences, and avoid taking measures that will disrupt global trade and result in collateral damage for those caught in the crossfire.”
Before the weekend trade discussions, Mr. Trump seemed to extend an olive branch by suggesting he would be open to lowering the tariffs to 80 percent. He wrote on Truth Social on Saturday that the talks were a breakthrough: “A total reset negotiated in a friendly, but constructive, manner.”
Nick Cumming-Bruce contributed reporting from Geneva and Christopher Buckley from Taipei.
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The United States and China said Monday they reached an agreement to temporarily reduce the punishing tariffs they have imposed on each other while they try to defuse the trade war threatening the world’s two largest economies.
In a joint statement, the countries said they would suspend their respective tariffs for 90 days and continue negotiations they started this weekend. Under the agreement, the United States would reduce the tariff on Chinese imports to 30 percent from its current 145 percent, while China would lower its import duty on American goods to 10 percent from 125 percent.
“We concluded that we have a shared interest,” said Treasury Secretary Scott Bessent at a news conference in Geneva where U.S. and Chinese officials met over the weekend. “The consensus from both delegations is that neither side wanted a decoupling,” he said.
China said it will suspend or revoke countermeasures adopted in retaliation for escalating tariffs. In early April, the Chinese government had ordered restrictions on the export of rare earth metals and magnets, critical components used by many industries, including automakers, aerospace manufacturers and semiconductor firms.
Mr. Bessent said the two countries may discuss purchase agreements of American goods by the Chinese government. Such a deal could help narrow the American trade deficit with China.
The agreement, for now, breaks an impasse that had brought much trade between China and the United States to a halt. Many American businesses had suspended orders, holding out hope that the two countries could strike a deal to lower the tariff rates. Economists have warned that the trade dispute will slow global growth, fuel inflation and create product shortages, potentially tipping the United States into a recession.
Chinese factories also experienced a sharp decline in export orders to the United States, heaping additional pressure on a sluggish economy. Chinese producers looked to expand trade to Southeast Asia and other regions to circumvent the U.S. tariffs.
Mr. Bessent said the tariffs had effectively created an embargo, something neither side wanted. The two countries said that ongoing negotiations will involve Mr. Bessent, Mr. Greer and He Lifeng, China’s vice premier for economic policy, who led the weekend talks for the Chinese.
Even a temporary reprieve from the shockingly high tariffs is cause for celebration for businesses in both countries. But the tariffs’ repercussions will linger. Businesses will likely encounter a flood of pent-up demand, leading to soaring transport prices, as companies race to schedule shipments during the 90-day negotiating window to take advantage of the lower tariff rates.
Global markets jumped on the announcement. The benchmark index in Hong Kong surged 3 percent, about the same amount as S&P 500 stock futures.
Zhiwei Zhang, the president and chief economist of Pinpoint Asset Management, an investment firm in Hong Kong, called the agreement a “good starting point” for both countries.
“From China’s perspective, the outcome of this meeting is a success, as China took a tough stance on the U.S. threat of high tariffs and eventually managed to get the tariffs down significantly without making concessions,” he said.
Mr. Bessent and Jamieson Greer, the United States Trade Representative, said the two countries had substantive discussions on U.S. demands that Beijing crack down on the trafficking of the chemical ingredients used to make fentanyl. Mr. Bessent said the Chinese “understood the magnitude” of the fentanyl crisis in the United States and that there is a “positive path forward.”
Mr. Trump initially added a 20 percent tariff to Chinese exports, accusing the country of not doing enough to stop the flow of fentanyl to the United States. That punitive tariff remains in place.
Mr. Greer said the negotiations were underscored by “mutual understanding and mutual respect,” but noted that China was the only country to retaliate against the United States after President Trump imposed so-called reciprocal tariffs on dozens of countries last month.
The Trump administration has accused China of unfairly subsidizing key sectors of its economy and flooding the world with cheap goods. Mr. Trump has said China has been “ripping off” the United States for decades with unfair trade practices that have decimated America’s manufacturing sector and cost the country jobs.
In laying out the agreement, Mr. Bessent and Mr. Greer were careful not to antagonize China, instead placing most of the blame for the trade war on the Biden administration for neglecting the trade imbalance.
Mr. Bessent raised the possibility that the two countries could help each other by balancing their economies, saying America could restore manufacturing while China could scale back overproduction in its manufacturing sector.
The two sides have sparred in public in recent weeks. The White House repeatedly said it was speaking with Chinese officials, while Beijing denied that such talks were taking place.
Initially, Beijing took a hard line to Mr. Trump’s punitive tariffs. Last month, Mao Ning, a senior Chinese Foreign Ministry spokeswoman, posted on X a video of a speech that Mao Zedong made during the Korean War — known in China as the War to Resist U.S. Aggression and Aid Korea — in which he declared, “No matter how long this war is going to last, we’ll never yield.”
China has carefully framed its involvement in the Geneva negotiations not as a concession to Mr. Trump’s tariffs, but as a necessary step to avoid further escalation. China’s Ministry of Commerce said the agreement was “in the interests of both countries and the common interests of the world” and that it hoped that the United States would “continue to work with China to meet each other halfway.”
Since the tariffs were announced, China has taken many punitive measures against the United States. It suspended imports of sorghum, poultry and bonemeal from American companies and added 27 firms to the list of companies facing trade restrictions.
On Monday, even as China agreed to roll back punitive measures it has imposed over the past month, multiple Chinese agencies, including the Ministry of Commerce and the Ministry of State Security, met to discuss how to strengthen export controls of strategic minerals.
In a statement, the European Chamber of Commerce in China said it was “encouraged” by the announcement, but that “uncertainty remains” because the tariffs are only temporarily suspended.
President Jens Eskelund, president of the European Chamber, said it “hopes to see both sides continue to engage in dialogue to resolve differences, and avoid taking measures that will disrupt global trade and result in collateral damage for those caught in the crossfire.”
Before the weekend trade discussions, Mr. Trump seemed to extend an olive branch by suggesting he would be open to lowering the tariffs to 80 percent. He wrote on Truth Social on Saturday that the talks were a breakthrough: “A total reset negotiated in a friendly, but constructive, manner.”
Nick Cumming-Bruce contributed reporting from Geneva and Christopher Buckley from Taipei.
