On Monday, China and the United States announced a groundbreaking accord to temporarily reduce their reciprocal tariffs, as the two economic titans strive to terminate a trade war that has cast a shadow over the global economy and sent financial markets into turmoil. Following negotiations in Geneva, US Treasury Secretary Scott Bessent, flanked by US Trade Representative Jamieson Greer, addressed reporters, revealing a 90-day truce on further tariff hikes and a significant rollback—a decrease of over 100 percentage points to 10%.
"Both nations have forcefully advocated for their respective national interests," Bessent emphasized. "Our shared aspiration for balanced trade persists, and the United States remains committed to advancing towards this goal." The weekend talks marked a pivotal moment, with both sides commending the strides made in narrowing their differences.
These Geneva gatherings marked the first direct engagement between high-level economic officials from both countries since President Donald Trump's return to office, during which he embarked on a global tariff spree, particularly targeting China with steep levies. Since assuming the presidency in January, Trump has hiked tariffs on Chinese imports to 145%, building upon those imposed during his first term and augmented by the Biden administration's duties.
China retaliated by restricting exports of crucial rare earth elements, essential for American manufacturers of military equipment and consumer electronics, and hiking tariffs on US goods to 125%. This tariff skirmish brought nearly $600 billion in bilateral trade to a halt, disrupting supply chains, fueling stagnation and inflation fears, and prompting job losses.
Financial markets, eagerly awaiting any signs of a thaw in the trade war, responded positively on Monday. Wall Street stock futures surged, and the dollar strengthened against its safe-haven peers, as the talks ignited hopes of averting a potential global recession.
