The US has made a major retreat in its weeks-long trade war against China, agreeing to substantially reduce tariffs it had imposed on Chinese goods for a period of 90 days, multiple media outlets report.
Duties charged on most Chinese goods will fall to 30 percent by Wednesday, while the rate China had imposed on US goods in response will go down to 10 percent.
According to CNBC, Chinese officials are celebrating the agreement – reached far faster than most predicted – as proof that Beijing’s hardline negotiating tactics worked. The Chinese government has staunchly refused to bend to the US, resulting in an aggressive tariff escalation that saw Washington impose rates of 145 percent on most Chinese imports, and Beijing retaliate with a blanket 125 percent on imports from the US. Much trade between the world’s two largest economies was put on hold as a result.
Scott Kennedy, a China business and economics expert at the Washington-based Center for Strategic and International Studies, told Reuters that Monday’s announcement was “100 percent a retreat by the US, not a Chinese cave.” He pointed out that the US had launched the trade war, while “the Chinese retaliated and they’ve only withdrawn their retaliatory measures.”
The two sides finally agreed to start trade talks last week, with Vice Premier He Lifeng meeting with US Treasury Secretary Scott Bessent and trade representative Jamieson Greer in Geneva, Switzerland, on Friday. Negotiations continued over the weekend and details of the interim deal were made public on Monday.
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In a joint statement, the Chinese and US governments pledged they would move forward in “the spirit of mutual opening, continued communication, cooperation, and mutual respect” – similar wording to what Beijing has been calling for all along. It also specified that the amended US tariffs also applied to imports from Macao and Hong Kong.
What the final trade deal will look like remains up in the air. US President Donald Trump said yesterday that further talks would focus on possibilities for US businesses in China. “We’re not looking to hurt China,” he stated. Bessent said that a deal requiring China to buy more from the US to help balance its trade deficit could be on the cards.
China has reportedly agreed to suspend or revoke certain measures imposed in retaliation to Trump’s so-called “Liberation Day” tariff announcement on 2 April. These may include lifting restrictions on rare earth exports, which are critical components of US industry – including in semiconductor manufacturing.
Global markets rallied in response to Monday’s news, with Dow Futures rising by more than 2 percent, S&P 500 futures going up almost 3 percent and the Hang Seng index climbing by about 3 percent. The US dollar also strengthened.
The 30 percent tariff rate the US will start imposing on Chinese imports is still higher than the 25 percent applied prior to Trump’s initial reciprocal tariff blitz. This saw the majority of US trade partners hit with significant hikes in what Trump framed as a bid to rebalance US trade deficits. Days later, Trump announced he would pause all reciprocal tariffs except those on China.
