The US and China announced on Monday, the 12th of May, that they have agreed on a deal that will significantly reduce for 90 days the import tariffs or duties that both sides have imposed on each other, as the world’s two largest economies seek to end a trade war that has disrupted global prospects and rattled financial markets, reports the British broadcaster BBC.
After talks with Chinese officials in Geneva over the weekend, US Treasury Secretary Scott Bessent told reporters that the two sides had agreed to cut their tariffs by 115% for 90 days.
This was the first meeting between the two countries since US President Donald Trump imposed a 145% tariff on Chinese imports, to which Beijing responded with a 125% duty on some US goods.
Now US tariffs on Chinese imports will be reduced to 30% for 90 days, while Chinese tariffs on US imports will be reduced to 10% for the same period.
The US measures still include an additional component aimed at pressing Beijing to do more to curb the illegal trade in fentanyl, a powerful opioid drug.
But US officials said they were positively impressed by China’s willingness to tackle the problem.
“Both countries represented their national interests very well,” Bessent said. “We both have an interest in balanced trade, and the US will continue to move towards that.”
The introduction of the initial tariffs sent shockwaves through financial markets and raised fears of a global recession. It also halted trade of almost 600 billion US dollars, disrupting supply chains, raising fears of stagflation and leading to some redundancies.
The news of the lifting of the tariffs triggered a recovery in stock markets.
Hong Kong’s main stock index rose by 3% on the news. The Chinese stock market closed earlier, before the details of the deal were outlined, and rose by 0.8%. European markets opened higher and US markets are expected to rise by 2-3%.