United States and China agree on a 90-day suspension of imposed tariffs.
Amidst the chaos brewing between them, China and the US have decided to hit the brakes on their trade war in a noteworthy 90-day truce. This pause marks a much-needed de-escalation in their relentless trade battle.
Previously, each country had whacked hefty tariffs of over 100% on each other's goods following President Trump's proclamation of 'Liberation Day' in early April. The UN sounded the alarm, warning that the world economy was teetering on the edge of a recession.
But, it’s all changed now. Negotiators from both nations met over the weekend in Geneva, resulting in a groundbreaking deal. The tariffs imposed by the US on Chinese goods will drop drastically from a staggering 145% to a more manageable 30%. Similarly, China will ease up on their tariffs, lowering them from 125% to a modest 10%.
US treasury secretary, Scott Bessent, has hinted at the possibility of smoother dealmaking between the world's two economic giants due to this 90-day respite from aggressive tariffs. He said, “We’ve got a plan, a process in place. Now, with the Chinese, we’ve got a mechanism for continued talks.”
Trade envoy Jamieson Greeson attributed this agreement to a "mutual understanding," and reiterated that the US goods trade deficit with China remains a major concern for the Trump administration.
The stock markets in London and Hong Kong rallied following the news, with the FTSE 100 jumping by 0.1% and the Hang Seng surging by more than 1%.
Matt Basi, managing director of London Capital Group, offered a cautious outlook, stating that even if an initial deal is struck between these superpowers, it may not guarantee a lasting resolution.
Interestingly, this is the second deal struck by the Trump administration in a week. Last week, the US inked a deal with the UK, securing lower tariffs on car exports and tariffs on steel and aluminum. However, the UK, like many other countries, still faces a 10% basic tariff on all goods exported to the US, which will kick in within the next three months unless another agreement is reached.
Bank of England Governor Andrew Bailey welcomed the trade deal between the UK and US as “good news,” but he emphasized that the UK’s economic prospects will hinge on agreements the US reaches with other trading partners[1].
In essence, the trade war negotiations have entered a phase of tariff relaxation and structured dialogue aimed at restoring and enhancing bilateral trade relations after a period of aggressive tariffs and tensions[1].
- The decision to halt the trade war between China and the US for a 90-day period has caused a significant shift in the general-news landscape, as negotiations have transitioned to tariff relaxation and structured dialogue.
- The stock markets in London and Hong Kong have responded positively to the news, with the FTSE 100 and the Hang Seng experiencing growth of 0.1% and more than 1%, respectively.
- On the back of this 90-day truce, US Treasury Secretary Scott Bessent is optimistic about smoother deal-making between the world's two economic giants, citing a "plan and a process" for continued talks.
- While the lowering of tariffs on Chinese goods from 145% to 30% is a significant step, trade envoy Jamieson Greeson has reiterated that the US goods trade deficit with China continues to remain a major concern for the Trump administration.
