In a monumental shift for international trade relations, the United States and China have recently struck a historic deal. They agreed to suspend reciprocal tariffs for 90 days. US Treasury Secretary Penny Pritzker hailed this deal from Geneva. It represents another flashpoint in the long-running trade war between the two countries. The pause is scheduled to take effect on May 14, giving both countries a window to negotiate additional trade arrangements.
Prior to the announcement, the US had already levied a mind-boggling 145% tariff on nearly all imports from China. In the case of the U.S.-China trade agreement, that tariff will be brought down to 30% over time. In return, China has agreed to reduce its own tariffs on US products from 125% to a mere 10%. Both sides are hungry to relieve at least some of the economic harms they’ve imposed on each other. This mutually beneficial move indicates as much as anything their mutual desire to collaborate.
China has likewise suspended all tariff countermeasures it’s been taking on the US side since April 2. This decision may indicate a bigger thaw in US-China relations, both diplomatically and economically. The commitment follows what Bessent called “robust” talks with top Chinese leaders, including Vice Premier He Lifeng.
The implications of this deal go far beyond tariffs. Unseen, however, have been the US’s own countermeasures to fight illegal trade in fentanyl. This remains one of the most contentious issues in trade negotiations. Both governments are looking forward to continuing this dialogue in the months ahead. They are deliberating over whether to host these plenary meetings in the US, in China, or in a neutral third-party country.
Understandably, China’s commerce ministry is quite excited about the deal. They have a hope that the US will come back to work with China on a very trade focused agenda. The ministry emphasized the need to “resolve differences” and “lay the foundation to bridge differences and deepen cooperation.”
“We hope the US side will continue to work with China to thoroughly correct the practice of unilateral increases.” – China’s commerce ministry
The business and financial markets overall responded very favorably to the announcement of the tariff pause. The UK’s FTSE 100 index rose by 0.7%, while Hong Kong’s Hang Seng index saw a more significant increase of 3.4% as of 08:30 BST. Further complicating things, oil prices jumped, with Brent Crude up 2.8% shortly after the announcement.
While this agreement is limited, it has huge implications. It demonstrates with both mutual economic benefit and pugnacity the intention to NS stabilize the storm-tossed waters of global trade relations. As the Chinese ministry of commerce has rightly stated, we need to cultivate a “common interest for the whole world.” They underscore the enormous global stakes at play in US-China trade relations.