GENEVA (Reuters) -The United States and China said on Monday they have agreed a deal to slash reciprocal tariffs for now as the world’s two biggest economies seek to end a trade war that has disrupted the global outlook and set financial markets on edge.
Speaking after talks with Chinese officials in Geneva, Treasury Secretary Scott Bessent told reporters the two sides had agreed on a 90-day pause on measures.
Tariffs will come down by over 115 percentage points on both sides, meaning China’s tariffs on US goods should drop to 10%, from 125%. The 125% US “reciprocal” duties on Chinese imports will also fall to 10%, though China still faces a separate 20% tariff related to fentanyl.
“Both countries represented their national interest very well,” Bessent said. “We both have an interest in balanced trade, the U.S. will continue moving towards that.”
Bessent was speaking alongside U.S. Trade Representative Jamieson Greer after the weekend talks in which both sides had hailed progress on narrowing differences.
The Geneva meetings were the first face-to-face interactions between senior U.S. and Chinese economic officials since U.S. President Donald Trump returned to power and launched a global tariff blitz, imposing particularly hefty duties on China.
Since taking office in January, Trump has hiked the tariffs paid by U.S. importers for goods from China to 145%, in addition to those he imposed on many Chinese goods during his first term and the duties levied by the Biden administration.
China hit back by putting export curbs on some rare earth elements, vital for U.S. manufacturers of weapons and electronic consumer goods, and raising tariffs on U.S. goods to 125%.
The tariff dispute brought nearly $600 billion in two-way trade to a standstill, disrupting supply chains, sparking fears of stagflation and triggering some layoffs.
Financial markets have been looking out for signs of a thaw in the trade war and Wall Street stock futures climbed and the dollar (DX=F) firmed against safe haven peers on Monday as the talks boosted hopes a global recession might be avoided.
“This is better than I expected. I thought tariffs would be cut to somewhere around 50% and this is much lower,” Zhiwei Zhang, chief economist at Pinpoint Asset Management, told Reuters. “Obviously, this is very positive news for economies in both countries and for the global economy, and makes investors much less concerned about the damage to global supply chains in the short term.”
“But we also need to keep in mind this is only a three-month temporary reduction of tariffs. So this is the beginning of a long process. The two sides will spend months probably, to come up with a resolution, or reach a final trade deal, but this is a very good starting point,” he added.
(Reporting by Emma Farge and Olivia Le PoidevinEditing by Dave Graham)
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