tHe and China agreed on Monday to significantly reduce tariffs in a major breakthrough in the trade war between the world's two largest economies during the first 90 days.
According to U.S. Treasury Secretary Scott Bessent, effective Wednesday, May 14, the two countries will reduce tariffs on another country by 115% in that period. This actually means that U.S. exports to China will be reduced to 30%, while Chinese tariffs on U.S. goods will be reduced to 10%.
The higher U.S. tax rates are, President Donald Trump said it was a response to the flow of fentanyl, which would be the 20% tariff in February and March.
Bessent said the two sides showed “great respect” during the weekend’s marathon trade talks in Geneva, which led to a breakthrough and that “both sides wanted to decouple.”
A spokesman for the Chinese Ministry of Commerce said Beijing hopes that the United States “continues to move in the same direction as China, completely correct the wrong practices of unilateral tariff hiking, and continue to strengthen mutually beneficial cooperation.”
The trade war has caused China's exports to plummet, and the United States has seen its first quarter of GDP contraction since 2022.
Tariff suspension news markets soared on Monday. In the afternoon trading in Asia, Hong Kong's Hang Seng Index grew nearly 3%, while U.S. stock futures rose sharply.
In a joint statement issued by the White House, the United States and China said they agreed to continue the discussion in the coming days. "The two sides may conduct engineering consultations on related economic and trade issues," the statement said.
Bessent will represent the United States in these future meetings with Vice Premier He Lifeng of the State Council to represent China.
The 90-day pause is the most significant reduction in the ongoing trade war between the United States and other countries.
Charlier Cornes, a senior economist at the Center for Economic and Business Studies, told Time that Monday's suspension "strengthened the U.S. view that the negotiation of tariff arrangements remains open to the negotiation of tariff arrangements, but warned that interest rates remain higher than the "liberation day" on April 2.
A week later, on April 9, Trump announced a 90-day tariff suspension for most countries except China. Subsequently, the two countries initiated Tit-for-Tat levies, which resulted in a 145% tariff on Chinese goods, while China's reciprocal rate was 125%.