The United States and China reached a significant agreement on Monday to drastically reduce tariffs, easing a trade war that has caused volatility in global financial markets and heightened concerns about an impending economic downturn.
Following their first discussions since US President Donald Trump initiated the trade conflict, the two largest economies in the world issued a joint statement, confirming that their tariffs, previously in the triple digits, would now be reduced to two figures over the next 90 days. They also pledged to continue negotiations.
US Treasury Secretary Scott Bessent described the weekend talks with Chinese Vice Premier He Lifeng and trade representative Li Chenggang as “productive” and “robust.” Bessent added that both sides demonstrated “great respect” during the discussions.
Last month, President Trump imposed tariffs as high as 145% on Chinese imports, compared to a standard 10% for other countries. In response, China imposed duties of 125% on US goods.
Bessent revealed that both sides had agreed to reduce these tariffs by 115%, bringing US tariffs down to 30% and China’s tariffs to 10%. The joint statement also outlined the establishment of a new mechanism to continue discussions on economic and trade relations moving forward.
The Chinese Ministry of Commerce hailed the progress made, noting that the agreement “serves the interests of both nations and the broader global community,” and urged the US to work with China to address the issue of unilateral tariff hikes.
The announcement caused the dollar to rally, recovering from the losses it suffered when the tariff measures were initially implemented, while US stock futures soared. European and Asian markets also saw positive movement in response to the deal.
The trade war between the US and China had raised global concerns, with fears that the tariffs could spark inflation and potentially lead to a worldwide recession.
‘A Positive Step for the Future’
Ngozi Okonjo-Iweala, head of the World Trade Organization, called the talks a “significant step forward,” adding that this development “bodes well for the future.” She emphasized that the progress is not only crucial for the US and China but also for the rest of the world, particularly for the most vulnerable economies.
Ahead of the meeting, which took place at the Swiss ambassador’s residence in Geneva, President Trump had hinted on social media that he might lower tariffs, even suggesting that an “80% tariff on China seems right!” However, White House Press Secretary Karoline Leavitt later clarified that the US would not unilaterally lower tariffs, stating that China would need to make its own concessions.
The Geneva talks occurred just days after Trump announced a trade deal with Britain—the first such agreement following his global tariff campaign. The nonbinding five-page deal reassured jittery investors that Washington was willing to negotiate targeted tariff relief, although Trump kept a 10% tariff on most British goods and warned that such rates could serve as a baseline for other countries.
