The United States and China on Monday said they have agreed to a 90-day pause on most of the tariffs they have imposed on each other since last month. The deal, which comes after a weekend meeting in Geneva, Switzerland, is a major step toward easing a trade war that has rattled the global economy, and will significantly reduce how much each nation will charge on foreign imports.
Global stocks rallied after the terms of the deal were announced Monday morning, with market watchers expecting more positive developments for U.S. markets on the back of the news. According to officials, the pause is set to go into effect Wednesday.
As the news continues to unfold, here’s a breakdown of what the deal says, who it impacts, what it means for prices on goods and more.
What does the U.S.-China tariff deal say?
The U.S. tariffs on Chinese imports will be cut to 30%, while China’s levies on U.S. imports will be cut to 10%, the two countries said in a joint statement.
The U.S.′ 20% duties on Chinese imports relating to fentanyl are still in place, bringing total tariffs on China to 30% currently.
Previously, U.S. tariffs on China stood at 145%, while China implemented 125% levies on U.S. goods.
The two countries said they would also “establish a mechanism to continue discussions about economic and trade relations.” The U.S. will continue to be represented by Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer, while China will continue to be represented by Vice Premier He Lifeng.
What exactly does the deal mean?
The hope is that the talks between the world’s two largest economies continue. It’s also expected to bring relief to small businesses, and more stabilized pricing on goods coming from China for U.S. consumers.
Those watching the the markets have labeled the new U.S.-China deal to temporarily cut tariffs “better than expected,” “more workable” and even a “dream scenario” — and are expecting more near-term relief for investors, CNBC reported.
Still, uncertainty remained.
“The magnitude of this tariff reduction is larger than expected,” Tai Hui, chief market strategist for Asia Pacific at JPMorgan Asset Management, said in a note to clients Monday, although he noted that it would be difficult for Beijing and Washington to reach a more concrete trade arrangement in just three months.
“The 90-day period may not be sufficient for the two sides to reach a detailed agreement, but it keeps the pressure on the negotiation process,” Hui said. “We are still waiting for further details on other terms of this agreement, for example, whether China would relax on rare earth export restrictions.”
Tianchen Xu, a Beijing-based economist at the Economist Intelligence Unit, a financial forecasting service, said in a statement that the deal “will save medium and small enterprises on both sides of the Pacific,” according to NBC News. Xu also said it will be a relief for Chinese exporters, as well as U.S. importers.
“This carries positive implications for the overall economy and the labor market,” Xu said.
How we got here
The deal comes more than a month after Trump announced sweeping 10% tariffs plus more reciprocal tariffs on all countries. In the weeks that followed, economists warned of a recission and markets tumbled, though they have since rebounded. And while the U.S. had struck tariff deals with other trading partners, Beijing responded by imposing retaliatory tariffs and other non-tariff measures on Washington.
The United States has a larger goods trade deficit with China than with any other country, with President Trump often accusing the country it of “ripping off” the U.S. through unfair trade practices.
“We’re confident that the deal we struck with our Chinese partners will help us to resolve, work towards resolving that national emergency,” Greer said.
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