The US and China have agreed a 90-day pause on ‘reciprocal’ tariffs – drastically reducing rates for both countries, although the stakes remain high.
The US is cutting tariffs on Chinese goods to 30% for three months (from 145%) while China will lower tariffs on US goods to 10% (from 125%).
The agreement, signed in Geneva, is a positive development after three months of tension between the two superpowers, which has shaken global markets, and establishes a mechanism to continue future discussions.
US Trade Representative Ambassador Jamieson Greer said, “It’s important to understand how quickly we were able to come to agreement, which reflects that perhaps the differences were not so large as maybe thought.”
US President Trump is singularly focused on reducing the country’s $1.2 trillion annual trade deficit in goods – declaring it a “national emergency”.
The three-month pause opens up the prospect of more de-escalation, following the extensive list of ‘Liberation Day’ tariffs that range from 10% to 50% – and already there has been a softening in stance with some countries.
Last week the US announced its first trade deal with the UK, which itself unveiled a deal with India.
How US–Europe relations unfold, however, remains one of the most eagerly watched dynamics. EU member states postponed tariffs which were due to start 15 April by 90 days.
The European Commission has launched a public consultation on a list of US imports which could become subject to EU countermeasures, if ongoing EU–US negotiations do not result in a mutually beneficial outcome and the removal of the US tariffs. The list concerns imports from the US worth €95bn.
The Commission is also consulting on possible restrictions on certain EU exports of steel scrap and chemical products to the US worth €4.4bn.
European Commission President Ursula von der Leyen said, “The EU remains fully committed to finding negotiated outcomes with the US. We believe there are good deals to be made for the benefit of consumers and businesses on both sides of the Atlantic.”
China is one of the largest exports markets for US goods and services and the US is the top export market for China.
