The United States and China announced on Monday that they have reached an agreement on a temporary reduction of tariffs they imposed on each other. In a joint statement, the countries reported that they will suspend their tariffs for 90 days while negotiations take place. According to the agreement, the USA will reduce tariffs on Chinese imports from 145 to 30 percent, and China from 125 to 10 percent.
«We have concluded that we have common interests», said US Treasury Secretary Scott Bessent at a press conference in Geneva, where meetings between American and Chinese officials took place over the weekend. Bessent stated that the two countries held substantive negotiations regarding US demands for Beijing to curb the illegal trade of chemical ingredients used to produce fentanyl, noting that the Chinese «understand the scale» of the fentanyl crisis in the United States. Initially, Trump imposed 20-percent tariffs on Chinese exports, accusing the country of not taking sufficient measures to stop the flow of fentanyl into the United States. Currently, these tariffs remain in effect.
The agreement has broken the deadlock in trade between the two largest players in the global market.
After the escalation of trade relations, many American companies suspended orders, hoping that the two countries could agree on reducing tariffs. Chinese factories also faced a sharp decline in orders for exports to the USA, putting additional pressure on the sluggish economy.
As The New York Times writes, global markets surged on the news of the agreement. The main index in Hong Kong rose by 3%, about the same as the futures on S&P 500 stocks.
Photo: AFP