US, China agree to temporarily lower tariffs amid efforts to ease trade tensions
PTC Web Desk: In a significant development aimed at easing trade tensions, the United States and China have agreed to temporarily reduce tariffs on each other’s goods, according to a joint statement issued from Geneva. The move provides a 90-day window for the world’s two largest economies to continue negotiations and attempt to resolve their ongoing trade disputes.
As per the statement and information shared during a briefing on Monday, the United States will lower its combined 145% tariff rate on most Chinese imports to 30% by May 14. This figure includes levies related to fentanyl-linked products. In response, China will reduce its 125% tariffs on American goods to 10%.
"We had a very robust and productive discussion on steps forward on fentanyl," said US Treasury Secretary Scott Bessent, adding, "We are in agreement that neither side wants to decouple."
The joint announcement also mentioned that both countries will create a mechanism to continue dialogue on economic and trade matters, signaling a commitment to ongoing negotiations. This latest step marks a potential turning point in a tariff conflict that has significantly disrupted trans-Pacific trade flows. Earlier statements from both sides noted "substantial progress" in talks, which contributed to a recovery in financial markets and helped Chinese stocks rebound after the U.S. introduced new tariffs on April 2 under President Donald Trump's so-called "Liberation Day" policy.
US Trade Representative Jamieson Greer reiterated Washington’s goal of achieving more balanced trade with China, while the White House described the latest development as a "trade deal" in a Sunday press release. However, there is still ambiguity around the exact objectives both sides aim to achieve and the timeline for reaching a more comprehensive agreement.
China has earlier insisted on a full rollback of the US-imposed tariffs from earlier this year—a demand that runs counter to the American aim of reducing or eliminating its trade deficit with Beijing.
While recent developments have been met with optimism in the markets, past experience suggests caution. In 2018, a similar truce was reached, putting the dispute "on hold." However, the US later reversed its position, leading to over 18 months of continued negotiations and additional tariffs before the two countries signed the "Phase One" agreement in January 2020.
Despite that deal, China failed to meet its purchase commitments, and the US trade deficit with China surged during the COVID-19 pandemic, setting the stage for the renewed tensions now underway.
- With inputs from agencies
