The United States and China have reached a deal to significantly cut import tariffs on each other’s goods for a 90-day period, reducing levies by up to 115%. US Treasury Secretary Scott Bessent announced the agreement after two days of high-stakes negotiations in Geneva, aimed at diffusing escalating economic tensions that have impacted global trade flows and investor confidence.
Tariff Reductions and Trade Implications
According to the deal, the US will reduce tariffs on Chinese imports from 145% to 30%, while China will slash duties on American goods from 125% to 10%. This move is expected to stabilize rattled global markets and reduce import-export costs between the world’s two largest economies by billions of dollars. The 90-day window is expected to serve as a “confidence-building phase” while more permanent trade frameworks are discussed.
Quotes from Key Officials
US Treasury Secretary Scott Bessent said, “The consensus from both delegations this weekend is neither side wants a decoupling. What had occurred with these very high tariffs was the equivalent of an embargo, and neither side wants that. We do want trade, we want more balanced trade, and I think that both sides are committed to achieving that.” Bessent also mentioned that the US and China will establish a mechanism to continue discussions about economic and trade relations.
Market Reaction and Future Prospects
News of the agreement boosted stock markets, with Hong Kong’s benchmark Hang Seng Index ending the day up 3% and China’s Shanghai Composite Index closing 0.8% higher. European stocks rose in early trade, and early indications suggested that the main US stock markets would open up by 2-3%. Former President Trump celebrated the deal, proclaiming on his TruthSocial platform, “GREAT PROGRESS — this is the start of a TOTAL RESET!”.
China’s Response and Next Steps
China’s commerce ministry said the agreement reached with the US was an important step to “resolve differences” and “lay the foundation to bridge differences and deepen co-operation”. Officials from both nations have hinted that a more comprehensive deal might emerge before the end of July, provided the current ceasefire holds and no fresh provocations occur on either side. Technical working groups will continue talks on sensitive areas like intellectual property rights, data governance, and subsidies.