The US and China agreed to a 90 day pause on most of the tariffs they’ve imposed on each other in the last month. The combined US tariffs rate on Chinese imports will be cut to 30% from 145%, while China’s levies on US imports will be cut to 10% from 125%. No mention was made of de minimis at this time, which means that goods ordered from Temu and Shein and still subject to the tariffs (albeit lower ones).
The announcement came early this morning (Monday) after officials from the two countries met in Geneva over the weekend for their first face-to-face talks on tariffs since President Trump’s “Liberation Day” announcement last month that imposed 84% duties on Chinese imports (which later climbed to 125% and 145%).
Markets surged on the news in early trading Monday, with the S&P 500 and the Dow Jones Industrial Average climbing 2.6% and 2.5% respectively, and the Nasdaq rising 3.5%.
Goldman Sachs analysts wrote in a note to clients earlier today that the full set of US tariffs “would still be considerably higher and broader than expected by markets at the start of the year,” and noted that the pause is only for 90 days, which “should keep uncertainty high for both investors and businesses.”
Treasury Secretary Scott Bessent, who represented the US in the talks, said that the tariffs had amounted to “the equivalent of an embargo,” which neither side wanted, adding, “We do want trade, we want more balanced trade, and I think that both sides are committed to achieving that.”
Bessent rejected the idea that it would have been better to start with negotiations, rather than announcing a series of tariffs that upset the global economy and supply chain, claiming that the US had already tried to rebalance trade by working within the system and that “business as usual” would not have worked. What exactly did the US previously try?
He emphasized that the US did not want a general decoupling from China, and instead is “going to do a strategic decoupling, because we realized during Covid that efficient supply chains were not secure supply chains.”
