The United States and China have agreed to enforce a 90-day temporary truce on the imposition of new tariffs and will slash existing tariffs by 115%, US Treasury Secretary Scott Bessent said on Monday.
He said that the US and China have reached a consensus that eyes to ease the trade war between the two countries and open the way for further negotiations.
“An agreement has been reached with China on a 90-day pause, and to substantially move down tariff levels," he said.
The United States will cut its combined 145% tariffs on most Chinese imports, including those associated with fentanyl, to 30% by May 14, while China will lower its 125% tariffs on US goods to 10%, according to a joint statement released in Geneva.
“We had a very robust and productive discussion on steps forward on fentanyl. We are in agreement that neither side wants to decouple," Bessent said.
The statement also mentioned that the “parties will establish a mechanism to continue discussions about economic and trade relations".
The announcement marks a step forward towards easing the tariff war, which has resulted in a sharp decline in trade between the two countries.
Both the US and China had earlier said that there was “substantial progress" in their negotiations, which revived the markets and helped Chinese stocks recover losses that were caused after Trump’s tariffs announcement on April 2.
US Trade Representative Jamieson Greer said that the country seeks a more balanced trade relationship with China.
While the White House initially referred to the agreement as a “trade deal" in a statement on Sunday, it remains unclear what an acceptable outcome is for both sides or how long it will take to achieve. China had previously demanded the removal of all US tariffs imposed this year, a request that clashes with the US goal of reducing or eliminating the trade deficit.
Even though the markets have responded positively to the signs of progress in talks, past instance suggests that arriving at a trade agreement may take time — it at all it happens.
In 2018, the US and China had agreed to pause their dispute after talks; however, Washington later pulled out, sparking over 18 months of further tariffs and negotiations before the “Phase One" deal was signed in January 2020.
Source: India Today