The United States and China achieved a significant breakthrough this weekend. After intense trade negotiations in Switzerland, they committed to lowering tariffs on each other’s goods, just temporarily at first. The destructive tariffs have only recently been rolled back. Effective immediately, the US duties on Chinese imports will be reduced from 145% down to a mere 30% over the next three months. In return, China will cut its own tariffs on US goods from 125% to 10% for an equal period of time.
It was the first official meeting of the trade talks between the two countries. This was a big step, given that President Donald Trump first slapped high tariffs on Chinese products back in January. These tariffs were just one chapter in a tit-for-tat trade spasm that has rocked the relationship between the world’s two largest economies. US Treasury Secretary Steven Mnuchin has characterized the talks as “productive and constructive.” He endorsed the need for compromise and praised the robust desire on both sides to find common ground.
Both countries have much to gain by working collaboratively and are eager to improve tense relations. To further ensure a favorable trading environment, they all agreed to lower their tariff barriers. However, unlike in the previous meetings, the talks in Switzerland focused on finding solutions to the economic inequities that have long defined their trade partnership. By lowering each other’s reciprocal tariffs, both countries hope to establish an environment that will foster more discussions and possible solutions in the future.
The fine print never reveals what those percentage reductions are based on. Politically, this makeshift patch is both sides’ strategic sea change. The announcement of these tariff cuts follows a period of escalating trade tensions, underscoring the importance of diplomacy in resolving such disputes.
The lower tariffs will remain in place for 90 days. In the interim, TPA allows for constructive engagement from both countries to reach a more balanced pact. This period allows us to assess the trade pattern’s impact more deeply. Perhaps most importantly, it will create space for deeper negotiations on more meaningful tariff cuts and broader trade reform.