Home > Business > Economy

U.S. and China reach deal to slash trade tariffs

Published: 12 May. 2025, 18:17 Updated: 12 May. 2025, 18:33

U.S. Treasury Secretary Scott Bessent and U.S. Trade Rep. Jamieson Greer attend a news conference after trade talks with China in Geneva on May 12,. [REUTERS]

The United States and China said on Monday they have agreed a deal to slash reciprocal tariffs for now as the world's two biggest economies seek to end a trade war that has disrupted the global outlook and set financial markets on edge.

Speaking after talks with Chinese officials in Geneva, U.S. Treasury Secretary Scott Bessent told reporters the two sides had agreed on a 90 day pause on measures and that tariffs would come down by more than 100 percentage points to 10%.

“Both countries represented their national interest very well,” Bessent said. “We both have an interest in balanced trade. The U.S. will continue moving toward that.”

Bessent was speaking alongside U.S. Trade Rep. Jamieson Greer after the weekend talks in which both sides had hailed progress on narrowing differences.

The Geneva meetings were the first face-to-face interactions between senior U.S. and Chinese economic officials since U.S. President Donald Trump returned to power and launched a global tariff blitz, imposing particularly hefty duties on China.

Since taking office in January, Trump has hiked the tariffs paid by U.S. importers on goods from China to 145 percent, in addition to those he imposed on many Chinese goods during his first term and the duties levied by the Joe Biden administration.

China hit back by putting export curbs on some rare earth elements, vital for U.S. manufacturers of weapons and consumer electronics, and raising tariffs on U.S. goods to 125 percent.

The tariff dispute brought nearly $600 billion in two-way trade to a standstill, disrupting supply chains, sparking fears of stagflation and triggering some layoffs.

Financial markets have been looking out for signs of a thaw in the trade war, and Wall Street futures climbed and the dollar firmed against safe haven peers on Monday as the talks boosted hopes that a global recession might be avoided.

The tariff dispute brought nearly $600 billion in two-way trade to a standstill, disrupting supply chains, sparking fears of stagflation and triggering some layoffs. Financial markets were buoyed by the latest thaw in the trade war and Wall Street stock futures climbed as the talks boosted hopes a global recession might be avoided.

“This is better than I expected. I thought tariffs would be cut to somewhere around 50 percent,” 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.

Following the talks on Sunday, U.S. officials touted a “deal” to reduce the U.S. trade deficit, while Chinese officials said the two had reached an “important consensus” and agreed to launch another new economic dialogue forum. Trump gave a positive reading of the talks before they had concluded, saying that the two sides had negotiated “a total reset … in a friendly, but constructive, manner.”

The U.S. president levied the tariffs in part after declaring a national emergency over fentanyl entering the United States, and Greer said conversations on curbing the deadly opioid were “very constructive” though on a separate track.

Chinese Vice Premier He Lifeng was less categorical in his declarations but still hailed “substantial progress” following the talks that took place at the gated private villa of the Swiss ambassador to the United Nations overlooking Lake Geneva.

Reuters