GENEVA: The United States and China reached a better-than-expected deal to temporarily slash tariffs, sending stocks and the US dollar sharply higher, as the world’s two biggest economies seek to end a damaging trade war that has stoked fears of recession.
The US will cut extra tariffs it imposed on Chinese imports in April this year to 30 per cent from 145 per cent and Chinese duties on US imports will fall to 10 per cent from 125 per cent for the next 90 days, the two sides said on Monday (Apr 12).
The accord does not include the “de minimis” exemptions for low-value e-commerce shipments from China and Hong Kong, which the Trump administration terminated on May 2, according to a source familiar with the negotiations. The duties are also still higher than before US President Donald Trump announced a raft of tariffs on April 2.
However, the deal went further than many analysts had expected following weeks of confrontational rhetoric on trade.
“This is better than I expected. I thought tariffs would be cut to somewhere around 50 per cent,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong.
“Obviously, this is very positive news for economies in both countries and for the global economy, and makes investors much less concerned about the damage to global supply chains in the short term,” Zhang added.
Wall Street stocks jumped and the dollar rose, while gold prices fell on the news, which helped allay concerns about a downturn triggered by Trump’s escalation of tariffs aimed at narrowing the US trade deficit.
“Both countries represented their national interest very well,” Bessent said. “We both have an interest in balanced trade, the US will continue moving towards that.”
“We both have an interest in balanced trade, the US will continue moving towards that.”
Bessent was speaking alongside US Trade Representative Jamieson Greer after the weekend talks in neutral Switzerland in which both sides hailed progress on narrowing differences.
“The consensus from both delegations this weekend is neither side wants a decoupling,” Bessent said.
“And what had occurred with these very high tariffs … was the equivalent of an embargo, and neither side wants that. We do want trade.”
The tariff dispute had brought nearly US$600 billion in two-way trade to a standstill, disrupting supply chains, sparking fears of stagflation and triggering some layoffs.
The Geneva meetings were the first face-to-face interactions between senior US and Chinese economic officials since Trump returned to power and hit China particularly hard with his global tariff blitz.
China’s Vice Premier He Lifeng, speaking to reporters at China’s mission to World Trade Organization late on Sunday, described the talks as “candid, in-depth and constructive” on issues of concern to both countries.
“The meeting achieved substantial progress, and reached important consensus,” He said.
