The United States and China have announced a temporary agreement to reduce reciprocal tariffs, as the two largest economies aim to resolve a trade conflict that has unsettled global markets and the economic outlook
After discussions with Chinese officials in Geneva, US Treasury Secretary Scott Bessent informed reporters that both parties have settled on a 90-day pause in measures, with tariffs being reduced by over 100 percentage points to 10%, effective May 14.
Both sides committed to ongoing talks “in the spirit of mutual openness, consistent communication, collaboration, and mutual respect.”
“Each country conveyed its national interests effectively,” Mr. Bessent stated. “Both nations share a desire for balanced trade, and the US will continue to pursue this goal.”
“The consensus from both delegations this weekend is that neither side desires a decoupling,” Mr. Bessent remarked.
“The previously imposed high tariffs were akin to an embargo, which neither side wishes to maintain. We aim to foster trade,” he added.
The meetings in Geneva marked the first face-to-face discussions between senior economic officials from the US and China since President Donald Trump took office and initiated a global tariff campaign, which particularly targeted China.
Since January, President Trump has raised tariffs paid by US importers for Chinese goods to 145%, in addition to the existing tariffs from his initial term and those imposed during the previous administration under Joe Biden.
In retaliation, China has implemented export restrictions on certain rare earth elements crucial for US manufacturers of weapons and electronic consumer products, as well as increasing tariffs on US goods to 125%.
This tariff conflict has brought nearly $600 billion in bilateral trade to a halt, disrupting supply chains, inducing fears of stagflation, and resulting in some job losses.
Financial markets have been tracking indicators of a potential easing in the trade war, with Wall Street futures rising and the dollar strengthening against safe-haven currencies today as the discussions sparked optimism regarding the possibility of avoiding a global recession.
Jamieson Greer and Scott Bessent conduct a press conference in Geneva following the announcement.
Chinese Vice Premier He Lifeng characterized the talks as “candid, in-depth, and constructive” regarding issues of mutual concern earlier at China’s mission to the World Trade Organization.
“The meeting made significant progress and achieved vital consensus,” he reported, drawing applause from a large gathering of Chinese officials present at the WTO office.
Over recent decades, China and the US have established numerous consultation mechanisms to address trade and economic disparities, including the Economic Working Group initiated in 2023 by former President Biden’s Treasury Secretary Janet Yellen in collaboration with Vice Premier He.
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These discussions have served as platforms for voicing bilateral concerns but have made little progress toward Washington’s long-standing aim of shifting China’s state-controlled, export-led economy toward one driven by consumer spending.
The US and China conducted two days of tariff talks in Switzerland over the weekend.
The officials convened at the gated residence of Switzerland’s UN ambassador, overlooking Lake Geneva in the picturesque suburb of Cologny, with black Mercedes vans providing transport over the weekend.
Neutral Switzerland was selected as the meeting location following outreach from Swiss politicians during recent visits to China and the US.
Finance Minister Paschal Donohoe expressed his support for the 90-day pause.
He made his remarks to reporters in Brussels, where he is leading a meeting of the Eurogroup of Finance Ministers.
“We recognize that the current uncertainty surrounding global trade is affecting the economic outlook for many nations,” Mr. Donohoe stated.
“In this context, the signs of progress between the US and China are encouraging, but we will continue our work with the US, acknowledging that our trading relationship with them is worth billions of euros every single day,” he added.
