The US and China are to temporarily lower tariffs on each other’s products, according to a joint statement, in a move to cool trade tensions and give the world’s two largest economies three more months to resolve their differences.
The combined 145 percent US levies on most Chinese imports would be reduced to 30 percent, including the rate tied to fentanyl, by tomorrow, while the 125 percent Chinese duties on US goods would drop to 10 percent, according to the statement and officials in a briefing in Geneva, Switzerland, yesterday.
“We are in agreement that neither side wants to decouple,” US Secretary of the Treasury Scott Bessent said, adding that “we had a very robust and productive discussion on steps forward on fentanyl” and those talks might lead to “purchasing agreements” by China.
Photo: AFP
Bessent said that the tariff reductions announced do not apply to sectoral duties imposed on all US trading partners, and the tariffs applied on China during the first administration of US President Donald Trump remain in place.
The US statement also said that “the parties will establish a mechanism to continue discussions about economic and trade relations.”
China has always handled relations with the US based on the principles of mutual respect, Xinhua news agency reported.
China is committed to the stable development of relations with US, it said, adding that imposing pressure and threats are not the right way to deal with China.
The announcement represents a step toward de-escalating a tariff war that has led to an immediate slump in trade across the Pacific Ocean.
The two nations had earlier reported “substantial progress” in their talks, which buoyed markets and helped Chinese stocks recoup their losses since Trump’s “Liberation Day” announcement of tariffs on April 2.
US Trade Representative Jamieson Greer said the US wants to have more balanced trade with China and “our Chinese counterparts clearly came to deal this week.”
The White House called the agreement a “trade deal” in an initial statement on Sunday, but it is still unclear what an acceptable goal is for both sides or how long it would take to get there.
China previously demanded that the US remove all the tariffs it has imposed this year, which is incompatible with the US objective of reducing or ending the trade deficit.
While markets greeted reports of progress, history suggests that it could take a long time to reach a detailed agreement, if one is possible.
The two sides in 2018 also agreed to put their dispute “on hold” after a round of negotiations, but the US soon backed away from that deal, leading to more than 18 months of further tariffs and talks before the signing of the “Phase One” trade deal in January 2020.
In the end, China failed to live up to the purchase agreement in that deal and the US trade deficit with China jumped during the COVID-19 pandemic, setting up the current trade war.
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