US and China Reach Agreement on Tariff Reduction
On May 11, the United States and China reached a trade agreement in Geneva, marking a major development in their ongoing trade tensions. Both countries announced a 115% reduction in tariffs, effective for 90 days.
As per the agreement, the US will now impose a 30% tariff on Chinese goods, while China will impose a 10% tariff on US products. The two-day talks in Geneva led to this temporary yet significant breakthrough.
This is being viewed as a major win for President Donald Trump amid the trade war with China. US officials called it a positive deal aimed at reducing trade deficits. The White House announced the deal on May 11, but did not provide full details at the time.
Joint Statement Expected
Chinese Vice Premier He Lifeng stated that a joint statement would be issued on May 12 in Geneva. China's Vice Commerce Minister Lee Chenggang mentioned that the deal would bring good news to the global economy.
While US officials described the deal as a step towards balancing trade, Chinese officials highlighted it as a mutual agreement to restart economic discussions from a new perspective.
Previous Tariff Escalations
Last month, the Trump administration had imposed a 145% tariff on Chinese imports, prompting China to retaliate with a 125% tariff on US goods. This escalation led to a virtual halt in bilateral trade worth nearly $600 billion annually.
Trump: "Disagreements Not as Big as Expected"
US Trade Representative Jamie Greer said the quick consensus proved that the differences between the two countries were not as vast as initially perceived. He also acknowledged extensive preparations leading to the talks.
However, there has been no mention of eliminating the 145% US tariffs or the 125% Chinese tariffs from either side so far.
Trump Signals Tariff Reduction
About a week before the deal, Trump hinted at reducing tariffs on Chinese goods. He admitted that the current tariff rates were so high that trade between the two largest economies had essentially stopped.
Speaking on an NBC show, Trump said, "At any time, I can lower taxes on China, because without that, trade is impossible. And they want to trade."
Trump also pointed out that China's economy was struggling, with factory output at its lowest since 2023 and export orders significantly down.
First US-China Economic Meeting After Trump's Return
This was the first face-to-face meeting between senior US and Chinese economic officials since Donald Trump returned to office. He had previously launched global tariff wars and declared a national emergency over the fentanyl crisis.
In February, he imposed a 20% tariff on Chinese goods, followed by a 34% reciprocal tariff in April. Subsequent increases led to triple-digit tariffs, severely impacting $600 billion worth of trade between the nations.
Trump stated on Friday that an 80% tariff on Chinese goods would remain in place for now.