US and China to Temporarily Reduce Tariffs
A joint statement from Geneva indicates that the US and China will both lower tariffs on a range of goods from each other, albeit temporarily.
Specifically, tariffs on most Chinese imports in the US will drop to 30% by May 14, which encompasses tariffs related to fentanyl. In turn, China will reduce duties on 125% of US products down to 10%.
“As Treasury Secretary Scott Bescent noted, the discussions surrounding the fentanyl issue were robust and constructive. I think both sides are keen to maintain this dialogue,” he commented.
The statement mentions that a framework will be created for ongoing discussions regarding economic and trade relations. This announcement marks a move towards addressing the tariff conflict that had significantly affected trade between the two nations. Reports have indicated “substantial progress” during their discussions, contributing to a recovery in the Chinese stock market since President Donald Trump’s tariffs were termed “liberation day” on April 2.
Trade Representative Jamieson Greer emphasized the US’s aim for more balanced trade relations with China.
Initially labeled a “trade agreement” by the White House, the specifics of what both nations will ultimately agree on remain vague, as does the timeline for achieving those goals. China has previously called for the complete removal of all US-imposed tariffs from this year—a request that contradicts the US’s intention to address its trade deficit.
While there have been reports of progress in the market, history shows that reaching a comprehensive agreement can be time-consuming. For example, in 2018, both countries momentarily paused discussions after negotiations, only for the US to withdraw from the agreement shortly after, resulting in an extended period of additional tariffs and subsequent consultations leading up to the “Phase 1” trade deal signed in January 2020.
In the end, China faced challenges with a purchase agreement within the framework, while the US trade deficit with China surged during the pandemic, contributing to the current trade tensions.
