US-China trade deal: After levying over 125% tariffs, Beijing and Washington agree to cut duties to 10%, 30% for 90 days

With the ongoing trade discussions between the United States and China, Beijing has proposed reducing tariffs on goods from the US to 10 per cent from 125 per cent for 90 days. Meanwhile, the US has proposed cutting tariffs on Chinese goods to 30 per cent from 145 per cent during the trade talks in Geneva.

The world's largest economies have temporarily agreed to lower tariffs on goods manufactured in both countries, according to a joint statement released in Geneva. This latest development marks the first step towards de-escalating trade tensions between the US and China following Donald Trump's reciprocal tariff announcement on April 2.

“We had a very robust and productive discussion on steps forward on fentanyl,” Treasury Secretary Scott Bessent said. “We are in agreement that neither side wants to decouple.”

The statement mentioned, “The parties will establish a mechanism to continue discussions about economic and trade relations.”

The two-day trade talks between the United States and China mark the first direct interactions between senior US and Chinese economic officials after President Donald Trump entered the White House for the second time and announced tariffs on trading partners, especially on China.

Markets react

Both countries have earlier stated “substantial progress” in trade talks, which helped Chinese stocks recover their losses since the reciprocal tariff announcement. Asian markets jumped, with Hong Kong rising 3 per cent, while Shanghai gained nearly 1 per cent. Stock exchanges in Japan and Taiwan also recorded gains after the trade deal announcement.

What's next?

In an initial statement on Sunday, the White House called the agreement a “trade deal”. However, there is no clarity regarding the future course of action after the proposed tariff deduction for 90 days. China has earlier asked the US to remove all the tariffs imposed on its imports this year. However, this does not align with the objective of the US to reduce or end the trade deficit.

What does history suggest?

In 2018, after a round of negotiations, both the US and China agreed to hold off on the trade dispute. However, the US backed away from that deal, which led to over 18 months of further tariffs and negotiations concluding with the signing of the “Phase One” trade deal in January 2020.