The US and China will temporarily reduce tariffs on each other's products, according to a joint statement issued in Geneva, in an attempt to reduce trade tensions and give the world's two largest economies another three months to resolve their differences, UNN writes with reference to Bloomberg.
Details
The combined 145% US tariffs on most Chinese imports will be reduced to 30%, including the rate pegged to fentanyl, by May 14, while 125% Chinese tariffs on US goods will be reduced to 10%, according to the statement and officials at a briefing on Monday.
"We had a very active and productive discussion about the way forward on fentanyl," said US Treasury Secretary Scott Bessent. "We agree that neither side wants to break off relations."
The statement also said that "the parties will create a mechanism to continue discussions on economic and trade relations."
As noted, this statement represents a step towards de-escalating the tariff war, which has led to a decline in trade across the Pacific. Earlier, both countries reported "significant progress" in their negotiations, which supported markets and helped Chinese stocks offset losses after US President Donald Trump announced tariffs on "Liberation Day" on April 2.
Trade Representative Jamison Greer said the US wants to have a more balanced trade with China.
The White House called the agreement a "trade deal" in an initial statement on Sunday, but it remains unclear what goal is acceptable to both sides or how long it will take to achieve it, the publication writes. Earlier, China demanded that the US remove all tariffs imposed by them this year, which is incompatible with the US goal of reducing or ending the trade deficit, the publication points out.
Addition
While markets have welcomed recent reports of progress, history, as noted, shows that reaching a detailed agreement can take a long time, if it is possible at all. In 2018, both sides also agreed to put their dispute "on hold" after a round of negotiations, but the US soon abandoned the deal, leading to more than 18 months of additional tariffs and negotiations before the Phase One trade deal was signed in January 2020.
In the end, China did not fulfill the purchase agreement in this deal, and the US trade deficit with China grew sharply during the pandemic, which led to the current trade war, the publication writes.