The United States and China reached an agreement to reduce their tariffsand declare a truce for an initial period of 90 days , following a high-level meeting held last weekend in Geneva, Switzerland.
Starting May 14 , the northern neighbor will reduce tariffs on Chinese products from 145% to 30% , including those related to combating fentanyl trafficking. For its part, China will reduce tariffs on US products from 125% to 10% .
U.S. Treasury Secretary Scott Bessent , along with U.S. TradeRepresentative Jamieson Greer , held a press conference to announce the agreement.
“We hope that as negotiations progress, there will also be the possibility of purchase agreements to balance our already large bilateral trade deficit,” Bessent said.
In addition, the parties agreed to cancel 91% of existing tariffs and suspend another 24% for the 90-day period.
“This initiative aligns with the expectations of producers and consumers in both countries and serves the interests of both nations, as well as the common interests of the world,” the Chinese Ministry of Commerce said in a statement.
However, after the announcement in Geneva, US President Donald Trumpindicated that the 25% tariffs on vehicles and steel and aluminum will remain in place, and that new taxes on the pharmaceutical industry are being considered to “bring that business back to the United States.”
Impact on the markets
Following the announcement of the truce, the stock markets took a breather. The S&P 500 Index rose 3.1% , the Dow Jones Industrial Average rose 2% , and the offshore yuan gained 0.5% against the US dollar.
In addition, oil prices soared more than $1.60 per barrel, and the US dollar gained against the euro and the Japanese yen.
Last April, the U.S. administration raised tariffs on Chinese goods to 145% , while China imposed 125% tariffs on goods from the United States, creating uncertainty in the markets and leading to a decline in bilateral trade.
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