The United States and China have agreed to reduce tariffs for three months, easing tensions in their ongoing trade war.
In a surprising twist, the United States and China have decided to cool down their heated trade battle, agreeing to cut tariffs for the next three months. This move comes after months of back-and-forth in which both countries slapped hefty taxes on each other’s goods, causing worry about empty shop shelves and rising prices. According to a report from the Times, the US will now lower its tariffs on Chinese products to 30 per cent, while China will reduce tariffs on American goods to 10 per cent.
The trade war kicked off when US President Donald Trump ramped up tariffs on Chinese imports to a staggering 145 per cent. China hit back hard, imposing 125 per cent duties on American products. This tit-for-tat escalation had everyone on edge, especially American farmers who rely on China to buy their corn and soybeans, and shop owners who feared they wouldn’t have enough stock to sell. The Times noted warnings that if the trade war didn’t ease up, American stores could face empty shelves, which would’ve been a nightmare for shoppers.
The announcement of the tariff cuts came after intense talks in Geneva, where US Treasury Secretary Scott Bessent met with Chinese Vice-Premier He Lifeng. Bessent described the discussions as making “substantial progress,” while He Lifeng called it an “important first step”. China’s Vice Commerce Minister, Li Chenggang, was equally optimistic, telling Bloomberg, “This will be good news for the world. As we say back in China, ‘If the dishes are delicious, the timing doesn’t matter.’” This suggests both sides are hopeful that this deal could pave the way for better relations.
The news sent ripples through global markets. The pound took a bit of a hit as the US dollar strengthened against other currencies, according to the Times. Investors seemed to breathe a sigh of relief, moving away from safe bets like gold, which dropped 2.8 per cent to $3,234.65 per troy ounce. Earlier this year, when the so-called “liberation day” tariffs were announced in April, gold had soared to a record high above $3,400 per troy ounce, as reported by Reuters. Stock markets, on the other hand, were buzzing with excitement. London’s FTSE 100 climbed 0.6 per cent, Germany’s market jumped 1.5 per cent, and France’s rose 1.3 per cent. In Asia, Hong Kong’s Hang Seng surged 3.4 per cent, and China’s SSE Composite gained 0.8 per cent, the Times reported.
President Trump, never one to shy away from sharing his thoughts, took to his social media platform, Truth Social, to call the talks a step toward a “total reset” in US-China relations. He described the negotiations as “friendly, but constructive,” and stressed the importance of opening up China to American businesses, saying, “We want to see, for the good of both China and the US, an opening up of China to American business,” as quoted by the Times. This isn’t the first time Trump has tried to strike a deal with China. Back in January 2020, he signed a trade agreement, but later accused China of not sticking to it and claimed his successor, Joe Biden, failed to enforce it, according to CNN. This led to Trump imposing a blanket 10 per cent tariff on all Chinese goods in February, prompting China to retaliate with tariffs on American agricultural products.
The Geneva talks marked the first face-to-face meeting between senior officials from the world’s two biggest economies since Trump introduced steep new tariffs last month, sparking a fierce response from Beijing. The escalating measures had American farmers and retailers on tenterhooks. Farmers, in particular, were worried about losing China as a major market for their crops, while retailers feared supply shortages. On NBC’s Meet the Press, Trump brushed off concerns about empty shelves, saying he didn’t think an 11-year-old girl “needs to have 30 dolls … I think they can have three dolls or four dolls because what we were doing with China was just unbelievable. We had a trade deficit of hundreds of billions of dollars with China,” as reported by the Times.
From Geneva, US Trade Representative Jamieson Greer explained the reasoning behind the tariffs, pointing to the massive $1.2 trillion trade deficit with China. “The president declared a national emergency and imposed tariffs,” Greer said in a statement quoted by the Times. “We’re confident that the deal we struck with our Chinese partners will help us to work toward resolving that national emergency.” This trade deficit has been a sore point for the US, with the Economic Policy Institute noting that it reflects an imbalance where the US imports far more from China than it exports, affecting jobs and industries.
The tariff cuts are a temporary measure, set to last 90 days, giving both sides a chance to keep talking and hopefully avoid another round of trade chaos. For now, the deal has brought a sense of calm to markets and businesses, but there’s still a long road ahead to sort out the deeper issues. The BBC reported that trade tensions between the US and China have been simmering for years, driven by concerns over fair trade practices, technology transfers, and market access. This latest agreement might not solve everything, but it’s a step toward easing the strain felt by farmers, shop owners, and consumers on both sides of the Pacific.
