In a significant breakthrough for international trade relations, the US and China have reached an agreement. Third, they will suspend or lower tariffs for 90 days. On Monday, U.S. governors and China’s vice premier signed an ambitious Joint Cooperation Plan to eliminate or substantially reduce tariffs on one another’s goods. This step seeks to deepen economic connections between the two countries.
Under the new deal, tariffs the U.S. placed on China will drop from 145% to 10%. At the same time, China will be able to lower its tariffs on U.S. exports from 125% to 10%. This joint action is a remarkable decrease of 115% in tariff rates between the two nations.
At a press conference organized in early May in Lake Geneva, U.S. Treasury Secretary Scott Bessent underscored the importance of this agreement. He continued, “Our discussions were very constructive. I think the setting here in Lake Geneva was a big part in creating the collaborative spirit of the process.” He gave more detail on the terms of the deal. It’s extremely significant that he said both countries will bring their tariffs down at least that impressive amount.
The recent agreement has introduced another hopeful spell. The agreement would not erase the current U.S. 20% duty on Chinese imports associated with fentanyl. Total tariffs on China now amount to upwards of 30%. The new agreement is set to defuse some of the trade hostilities that have characterized their partnership in recent years.
The recent negotiations come on the heels of President Donald Trump’s implementation of “reciprocal” tariffs on global trade partners in early April. This strategy was initially effective at shielding American industry but resulted in a trade war that quickly soured relations with China and other trading partners. The commitment to lower tariffs is a tiny step away from hostility and competition, and towards working together to solve shared problems.
The U.S. and China are no strangers to conflict over unfair trade practices. The damage done by previous tariffs to their economic relationship was still raw. The decision to negotiate a trade deal reflects a mutual understanding of the need for improved economic cooperation and the benefits it can bring.
Both countries have made strong efforts to carry out this agreement. At the same time, market analysts are trying to parse its potential impacts on global trade dynamics. This 90-day break from tariff escalation has the potential to dramatically shift the tone going forward. It would achieve more durable solutions to the current and longstanding trade irritants.