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Post Reply: U.S. and China Strike Deal to Slash Tariffs, Easing Global Trade Tensions

<blockquote><div class="quotetitle">Quote from <a class="profile-link highlight-moderator" href="https://lawguide.co.ke/understanding-law/legal-forum/profile/lawyer/">Lawyer</a> on May 12, 2025, 5:14 pm</div><div id="pl-5546" class="panel-layout">
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<p dir="ltr" data-pm-slice="1 1 []">In a significant step toward de-escalating a trade war that has rattled global markets, the United States and China have agreed to temporarily reduce steep tariffs imposed on each other’s goods. The deal, announced Monday following intense weekend negotiations in Switzerland, will see U.S. tariffs on Chinese imports drop from 145% to 30% and Chinese duties on American goods fall from 125% to 10% for the next 90 days. This truce aims to stabilize supply chains and curb fears of a global recession.</p>
<p dir="ltr">The agreement comes after months of escalating trade tensions, sparked by U.S. President Donald Trump’s April 2 tariff hikes, which he dubbed “Liberation Day.” China’s retaliatory tariffs and restrictions on critical minerals had brought bilateral trade—valued at nearly $600 billion annually—to a near standstill. The tit-for-tat measures disrupted global supply chains, triggered layoffs, and fueled concerns about stagflation, a mix of high inflation and weak economic growth.</p>
<p dir="ltr">U.S. Treasury Secretary Scott Bessent, who led the American delegation alongside Trade Representative Jamieson Greer, described the talks as “productive” and emphasized a shared desire to avoid economic decoupling. “Neither side wants an embargo,” Bessent said at a Geneva press conference, noting that the high tariffs had effectively halted trade. Chinese Vice Premier He Lifeng called the discussions “candid, in-depth, and constructive,” highlighting the establishment of a consultation mechanism to address ongoing trade issues.</p>
<p dir="ltr">The tariff reductions, effective Wednesday, include a U.S. base tariff of 10% on all imports, plus a 20% duty tied to concerns over fentanyl-related chemicals from China. While the deal has sparked optimism—Wall Street futures surged, with the S&amp;P 500 up 2.7% and Nasdaq 100 climbing 3.8%—analysts warn that the 90-day pause is temporary and may not resolve deeper issues. “This is a substantial de-escalation, but the U.S. still maintains higher tariffs on China than other countries,” said Mark Williams, chief Asia economist at Capital Economics. “There’s no guarantee this truce will lead to a lasting ceasefire.”</p>
<p dir="ltr">Businesses and consumers, strained by rising costs, welcomed the reprieve. Importers, who faced doubled prices for Chinese goods, hope for restored supply chains, though uncertainty persists. Jens Eskelund, president of the European Union Chamber of Commerce in China, cautioned that “businesses need predictability to make investment decisions.” The U.S. is pushing for China to increase purchases of American goods, revisiting unfulfilled commitments from a 2020 trade deal, while China seeks clarity on non-tariff barriers and market access.</p>
<p dir="ltr">Global markets reacted positively, with the dollar rallying and gold prices dipping as recession fears eased. However, analysts like Alicia Garcia-Herrero of Natixis argue that the deal merely “smooths the impact” of a broader economic divergence between the two powers. Future talks, set to occur in the U.S., China, or a third country, will test whether this breakthrough can pave the way for a more permanent resolution.</p>

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