China Agree to tariff Reduction, Trade Talks continue">
Capital — May 7, 2024 —
In a notable development, the U.S. and China have struck a deal mandating a temporary tariff reduction on each other’s goods, aiming to de-escalate ongoing trade disputes, according to sources. The agreement, reached after weekend discussions, will be in effect for 90 days, signaling a potential shift in the trade relationship between the world’s two largest economies. This reduction in tariffs is hoped to provide a window for additional negotiations and discussions, according to Treasury Secretary Scott Bessent. For more details, read on.
U.S.and China Agree to Tariff Reduction,trade talks Continue
In a significant move to ease tensions,teh United States and China reached an agreement monday to reduce tariffs on each other’s goods for a 90-day period. This agreement signals a major de-escalation in the trade dispute between the world’s two largest economies, paving the way for continued negotiations.
Details of the Agreement
Following weekend discussions in Switzerland, Treasury Secretary Scott Bessent announced that both nations have agreed to a substantial reduction in reciprocal tariffs. According to Bessent, the agreed-upon reduction amounts to 115% over the next 90 days.
- President Donald Trump’s 145% tariffs on Chinese goods will decrease to 30%.
- Within that framework, reciprocal tariffs will fall from 125% to 10%.
- A separate 20% levy related to fentanyl will remain in effect.
- Beijing’s 125% levy on U.S. goods will also be reduced to 10%.
Unexpectedly Large Reductions
The scale of these tariff reductions exceeded initial expectations. Prior to the negotiations, President Trump indicated on social media that 80% tariffs on China “seems right”
.
Finding Common Ground
The tariff reductions suggest that both sides were able to find common ground after previously imposed levies effectively caused a trade embargo between the two countries. Bessent emphasized the shared understanding reached during the talks:
The consensus from both delegations this weekend was neither side wants a decoupling. We concluded that we have shared interest and we both have an interest in balanced trade.
Treasury Secretary Scott Bessent
Beijing’s Perspective
China’s Commerce Ministry characterized the agreement as an “important step”
in resolving the ongoing disputes between the U.S.and China. The ministry also expressed hope that the U.S.would thoroughly correct the wrong practice of unilateral tariff increases.
Mechanism for Continued Talks
A significant outcome of the recent discussions is the establishment of a framework for continued dialog. Bessent noted that Considerably, the two sides now have a mechanism for continued talks.
China will now be included among the countries given 90 days to reach a trade agreement with the U.S., although some nations are already more than a month into their allotted pause.
