U.S. and China Reach 90-Day Trade Truce Amid Tensions
China and the United States have agreed to a 90-day truce in their ongoing trade war, easing tensions between the two superpowers. This decision followed a high-level meeting in Geneva, Switzerland, where representatives from both nations discussed their economic relationship. The joint statement, released on Monday and reported by Chinese state media, indicated that Washington and Beijing plan to substantially reduce the tariffs that had been imposed since April 2, when former President Donald Trump initiated the first wave of tariffs, declaring the day as "Liberation Day."
Under the terms of the agreement, the U.S. will lower tariffs on Chinese goods from 145% to 30%, while China will cut its tariffs on U.S. imports from 125% to 10%. Both countries acknowledged the significant role their bilateral economic and trading relationship plays not just for themselves but for the global economy as a whole. They also emphasized the need for ongoing consultations to address the issues that contribute to their trade friction.
The agreement marks a shift in the approach taken by the U.S., as it effectively grants China a partial moratorium, reminiscent of the one enacted for other countries back in April. At that time, Trump had been under immense pressure from financial markets and criticism from within his own Republican Party, prompting him to pause the reciprocal tariffs for a period of 90 days, with China being the exception due to its retaliation.
China's new rate will amount to 30%, which includes a baseline 10% tariff and an additional 20% from previously imposed tariffs specifically on China. Meanwhile, the universal 10% baseline tariff on other nations will remain, along with existing levies on automobiles, steel, and aluminum. This represents one of the most extensive protectionist measures seen in a century.
As the situation develops, both nations are expected to follow up on the economic and trade discussions, which aim to reduce tension and foster a more stable trading environment. Efforts to mend the frayed economic ties will be crucial to ensuring the health of the global economy in the years to come.
Related Sources: