Breakthrough in Trade Dispute: USA and China Agree to Lower Tariffs Temporarily
Reduction of Reciprocal Tariffs: USA and China agree on a temporary tariff decrease - Tentative Deal: Reduction of Reciprocal Tariffs Agreed Between China and America
In a significant development, the USA and China have reached an agreement to decrease their mutual tariffs in an effort to resolve their ongoing trade dispute for a period of 90 days.
USA Slashes Tariffs by 115 Percent
As part of the agreement, US tariffs on Chinese imports will be reduced dramatically, dropping from a staggering 145 percent to 30 percent. The tariff reduction on Chinese goods will lead to reduced costs for American businesses and ultimately consumers. In response, China will lower its retaliatory tariffs on US imports from 125 percent to 10 percent.
Delegations from both nations met in Geneva for discussions on the trade conflict. Both sides have indicated some progress, although they have been tight-lipped about the specifics of the negotiations. According to Chinese state media, both sides agreed to establish a consultation mechanism for dealing with economic and trade issues. Vice-Premier He Lifeng stated that the meeting in Geneva was a crucial step in bridging differences through dialogue and paving the way for closer cooperation.
USA Declares Agreement on Tariff Dispute
US reports have also confirmed that an agreement has been reached in the tariff dispute, potentially resolving the deadlock in the trade conflict. The talks were attended by US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer, among others.
China and the USA, the world's two largest economies, have been at loggerheads. The previously imposed tariffs have made trade between the two nations impossible, causing significant disruptions to the global economy.
The Digital Division: China and USA Trade Conflict
This brief outline offers a digestible guide to the preliminary trade agreement involving China and the United States announced on May 13, 2025. The agreement focuses on reducing tariffs and promoting a sustainable bilateral economic relationship.
Crucial Aspects of the Agreement
- Tariff Reduction:
- China will temporarily suspend 24 percentage points of its additional tariffs for 90 days, retaining a 10% tariff.
- The specific details regarding US tariff reductions are not fully disclosed.
- Removal of Non-Tariff Measures:
- China will remove non-tariff countermeasures taken against the US since April 2, 2025.
- Continuous Discussions:
- Both sides will establish a mechanism for ongoing discussions to address economic and trade relations, with representatives from both countries meeting alternately in China, the US, or a third country.
Expected Impacts of the Agreement
- Tariff Tension Eased: The temporary reduction in tariffs is expected to alleviate trade tension and provide a more stable environment for bilateral trade.
- Remaining Tariffs: The retention of a 10% tariff by China and unspecified U.S. tariffs indicates that some trade barriers remain in place.
- Implications for the Global Economy:
- Trade Stability: The agreement may stabilize international trade flows and reduce the risk of escalating trade wars, promoting global economic stability.
- Market Confidence: The reduction in tariffs might boost market confidence by signaling a willingness to engage in dialogue and cooperation, potentially positively impacting global financial markets.
- Access to Markets: The agreement sets a path for future discussions on market access, which could provide more opportunities for American exports and contribute to global economic growth.
However, the temporary nature of the agreement and the retention of some tariffs suggest that the global economy might not experience immediate significant impacts until more enduring and comprehensive agreements are reached.
- The Commission has also been consulted on the draft budget that includes changes in tariff policies following the temporary reduction of tariffs between the USA and China.
- The resolution of the trade dispute between the USA and China, which involves a decrease in tariffs, is deemed as a general-news story that can impact finance and business, including the budget, due to its potential implications for the global economy.
