US and China Agree to Major Tariff Cuts, Easing Trade War Tensions

In a major step to ease the escalating trade tensions between the United States and China, both nations have agreed to substantially reduce tariffs over the next 90 days. The deal, finalised in Geneva, involves cutting reciprocal tariffs by 115%, with the US lowering its tariffs on Chinese products to 30%, and China reducing duties on US goods to 10%. These changes will be in effect by May 14.

US Treasury Secretary Scott Bessent highlighted the commitment to balanced trade and the shared goal of avoiding economic decoupling. This agreement follows a tense period of tariff hikes that began in early April, triggered by the US in response to its large trade deficit.

The announcement sparked positive reactions in global markets, with S&P 500 futures rising around 3% and the US dollar hitting a one-month high. Both sides also agreed to establish a trade consultation mechanism to prevent future tariff escalations, with discussions set to alternate between China, the US, or a mutually agreed third country.

US Trade Representative Jamieson Greer noted the surprising speed of the agreement, indicating that differences between the two sides may have been smaller than initially thought. While this deal marks a significant first step, it lays the groundwork for ongoing dialogue aimed at resolving broader trade issues.