- U.S. and China announced an agreement to greatly reduce tariff rates following trade talks
- The two countries reduced tariffs to 10%, though the U.S. retained a 20% fentanyl tariff.
- President Trump says China may also be ready to grant broad access for U.S. goods.
A tit-for-tat trade war that led to 145% tariffs on many Chinese import goods and a 125% rate on U.S. exports to the Asian powerhouse is on hold for the moment following high-level talks in Switzerland over the weekend.
In an agreement announced Monday, both countries will roll back reciprocal tariffs to a 10% rate for a 90-day period beginning Wednesday. Other, sector-specific U.S. trade levies on steel, aluminum and automobiles will remain in place, as will a 20% tariff announced by President Donald Trump earlier this year to address fentanyl trafficking.
The announcement follows two days of meetings in Geneva between Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer with a delegation of Chinese officials.
“We had very productive talks and I believe that the venue, here in Lake Geneva, added great equanimity to what was a very positive process,” Bessent said during a Monday news conference.
“We have reached an agreement on a 90-day pause and substantially move down the tariff levels. Both sides on the reciprocal tariffs will move their tariffs down 115%.”
What Trump had to say about trade deal
In comments made ahead of a press conference later Monday morning to announce new drug pricing policy, Trump lauded the weekend trade meetings as “historic.”
“The talks in Geneva were very friendly, the relationship is very good,” Trump said. “We’re not looking to hurt China. China was being hurt very badly. They were closing up factories, they were having a lot of unrest and they were very happy to be doing something with us.”
Trump also suggested the biggest win out of the negotiations is the possibility that China could be on the cusp of agreeing to creating broader access for American goods and businesses within Chinese borders.
“The biggest thing that we’re discussing is the opening up (of) China and they’ve agreed to do that but it’s going to take a while to paper it,” Trump said. “If we do get it, I think it’s the most important thing to have. We opened our country to China … and they didn’t open their country to us. They’ve agreed to open China, fully open China. I think it’s going to be great for unification and peace."
The U.S. tariff trail
Trump has directed a series of incremental increases in U.S. tariffs on Chinese goods, as well as imports from other countries, since he took office. Trump has argued that tariff policy is effective in addressing trade imbalances as well as compelling other nations to take action on issues like illegal immigration and drug trafficking.
Proclaiming it “Liberation Day, the president he declared a sweeping array of new levies on April 2. At a White House press event that day, he characterized his tariff pronouncement as a turning point for U.S. economic policy.
“This is one of the most important days, in my opinion, in American history,” Trump said. “It’s our declaration of economic independence.”
A week later, Trump announced a 90-day pause on most of the reciprocal tariffs that were included in his Liberation Day decree, with the exception of China, which was hit with another tariff increase at that time.
The on-again, off-again tariff policy gyrations have cast a cloud of uncertainty over the U.S. business sector and roiled investment markets. On Monday, the major U.S. stock indexes all shot up on news of the successful trade talks with China.
Here’s where new U.S. tariffs stand for the moment:
- China tariffs now at 30%, including a 10% base rate and 20% fentanyl-targeted levy.
- Tariffs of 25% are in place on steel and aluminum imports, imported automobiles and goods from Canada and Mexico not covered by the United States-Mexico-Canada Agreement.
- Imports from all other countries are subject to a 10% trade levy.