In a significant step toward easing trade tensions, the United States and China have agreed to reduce reciprocal tariffs, marking a 90-day truce in the trade war that has rattled global markets. The announcement follows high-level talks held in Geneva between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng.
The breakthrough deal, first reported by Reuters, includes a dramatic reduction in reciprocal tariffs by 115%, signaling a strong intention from both sides to move toward constructive trade engagement.
“We would like to see China more open to U.S. goods,” Bessent told reporters following the meeting, adding that both countries are committed to creating a more balanced trade environment.
According to China’s Ministry of Commerce, Beijing will fix tariffs on U.S. goods at 10% and suspend additional tariffs of 24% for the next 90 days. Moreover, China has agreed to scrap a further 91% in retaliatory tariffs, providing temporary relief to U.S. exporters.
Until now, Washington had imposed reciprocal tariffs of up to 145% on Chinese imports, prompting Beijing to retaliate with a reciprocal tariffs of 125% levreciprocal tariffsy on American goods and export restrictions on rare earth materials. The tariff battle, often described as an economic cold war, had virtually frozen trade flows between the world’s two largest economies.
Behind Closed Doors: A Weekend of Diplomacy
The sudden breakthrough came after intense closed-door negotiations over the weekend. Describing the discussions as “in-depth” and “candid,” Vice Premier He Lifeng emphasized that both nations are seeking to “reset the terms of trade engagement.”
This move marks a temporary de-escalation but not a final resolution. Analysts say the next 90 days will be critical as both sides work to build on the momentum and develop a long-term trade framework.
Winners and Watchers: India and ASEAN
The U.S.-China trade war has inadvertently benefited third-party economies, particularly India. With U.S. buyers facing steep tariffs on Chinese goods, many have turned to Indian suppliers, boosting India’s export potential. Additionally, the tensions have improved India’s prospects for closer economic ties with Western nations.
China’s Ministry of Commerce reported that despite a sharp 20% drop in exports to the U.S. in April, overall exports rose 8.1% year-on-year—thanks largely to strong demand from ASEAN countries and other emerging markets. This suggests that while reciprocal tariffs have strained U.S.-China trade, China has managed to cushion the blow by diversifying its export base.
Outlook
The agreement to slash reciprocal tariffs provides a crucial window for diplomacy, though experts caution that deeper structural issues—like technology transfer and intellectual property—remain unresolved.
For now, the global markets are expected to react positively, at least in the short term, to this sign of thawing relations.
