The United States and China have significantly reduced tariffs on each other’s goods for 90 days, marking a temporary pause in a trade war that has disrupted global markets and international supply chains.
The US and China reached an agreement to substantially lower previously high tariffs during crucial discussions that took place over the weekend in Geneva.
US President Donald Trump stated that the United States now possesses a framework for a “very, very strong” trade deal with China, which would facilitate greater access for US businesses to the Chinese economy, in an interview aired yesterday on Fox News.
“We have the groundwork for a very, very strong deal with China. The most thrilling aspect… is the opening up of China to US business,” he mentioned aboard Air Force One en route to the beginning of his Gulf tour.
US President Donald Trump’s tariff disputes with China have adversely impacted several US companies.
Mr. Trump had disrupted international trade with his sweeping tariffs, with China being the hardest hit.
In response, China imposed retaliatory tariffs that escalated the rates on both sides to well over 100%.
After billions were lost in the stock market and businesses suffered, negotiations commenced at the weekend in Geneva between the world’s trade titans to resolve the deadlock.
As per the agreement, the United States will lower its tariffs on Chinese goods to 30%, while China will cut its tariffs to 10%—a reduction of over 100 percentage points.
The changes took effect just after midnight Washington time (5 am Irish time), representing a significant reduction in trade tensions, which had seen US tariffs on Chinese imports reach as high as 145% and even up to 245% on certain products.
Markets have surged in response to the suspension of China-US tariffs.
Chinese officials have remained discreet, presenting themselves as a stable partner and advocate for globalization during a summit in China with Latin American leaders this week.
“There are no winners in tariff wars or trade wars,” China’s President Xi Jinping expressed to leaders, including Brazil’s Luiz Inacio Lula da Silva, while his senior diplomat Wang Yi criticized a “major power” that believed “might makes right.”
Read more: US and China reach deal to slash reciprocal trade tariffs
China suspends non-tariff countermeasures
Additionally, China announced the suspension of several non-tariff countermeasures against the United States, marking another step back in the trade war with Washington following discussions in Switzerland.
Beijing will halt certain restrictions on numerous US defense and aerospace companies “to implement the consensus reached at the China-US high-level economic and trade talks,” a spokesperson for the Chinese commerce ministry stated.
In a separate announcement, the ministry revealed it was pausing measures that added 17 US entities (including defense, automotive, and artificial intelligence firms) to the “unreliable entity list.”
Entities on that list are barred from import and export operations or making new investments in China.
The suspension for 11 entities added to the list on April 4 is valid for 90 days, although the ministry did not clarify the duration of the suspension for six other companies added on April 9.
The ministry did not provide a reason for the differing suspension durations.
In April, Beijing also announced export controls on seven rare earth elements—including those used in magnetic imaging and consumer electronics—which are still in effect.
‘Risk of renewed escalation’
Significant sources of tension remain, as the US’s additional tariff rate is still higher than China’s due to a 20% levy related to Mr. Trump’s grievances about Chinese exports of chemicals used to manufacture fentanyl.
The US has long accused China of overlooking the fentanyl trade, a claim that China denies.
While the US indicates it sees potential for progress on this issue, China cautioned the US yesterday to “stop smearing and shifting blame” onto it.
Chinese officials have acknowledged that China’s economy has been similarly affected by trade uncertainties.
Analysts also caution that the possibility of tariffs being reinstated after 90 days merely adds to the uncertainty.
“Further tariff reductions will be challenging, and the risk of renewed escalation persists,” Yue Su, Principal Economist at The Economist Intelligence Unit, commented.
