A Breath of Fresh Air: China and USA Agree on Temporary Tariff Relief
Tentative Deal: Tariffs between China and the U.S. See Decrease - Tentative deal: Duties between China and U.S. see a decrease
Tensions between China and the USA have taken a turn, with both nations agreeing to an initial 90-day reprieve on their punishing tariffs in the trade war setback.
USA Tariffs Slashed in Half
As a result, US tariffs on Chinese imports will significantly drop from a stifling 145 percent to a more manageable 30 percent. Simultaneously, China's retaliatory tariffs on US imports will plummet from 125 percent down to 10 percent.
Diplomatic discussions took place in Geneva, where both parties expressed optimism in the negotiations without revealing any specifics.
According to Chinese reports, the Geneva meeting served as a pivotal step in easing disagreements through dialogue and set the foundation for continued collaboration. As per Vice-Premier He Lifeng, both sides agreed to establish a consultation mechanism for economic and trade matters.
Progress on the Horizon
According to US reports, both parties reached an agreement concerning the tariff dispute, potentially breaking the impasse in the trade standoff. US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer, among others, represented the USA in these talks.
China and the USA, the powerhouses of the global economy, have been entangled in a dispute. The imposed tariffs reportedly impeded trade between the two nations, with ripple effects on the worldwide economy.
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Behind the Scenes:
- The agreement stipulates mutual 24% reduction in tariffs for an initial 90-day period. However, a baseline 10% tariff on the impacted goods will remain in place for both sides [1][3].
- The scope of the reductions varies.
- The United States will suspend 24% of the additional tariffs under Executive Order 14257 and remove tariffs imposed via Executive Orders 14259 and 14266.
- China will suspend an equivalent 24% from its additional tariffs on US goods alongside the removal of modified additional tariffs [3].
- Both sides committed to implementing the tariff reductions and removals by May 14, 2025 [1][3].
- The agreement lays the groundwork for future negotiations aiming to expand market access for American exports in China and tackle issues like unfair trade practices and the US trade deficit with China [1].
Flicker of Hope:
- The agreement signifies a de-escalation in trade hostilities and a thaw in relations concerning economic matters [1][2].
- The deal marks a win for the US administration, who argue that the reduction and elimination of retaliatory tariffs by China and the retention of key US tariffs protect American industries, easing concerns about job losses and the decline of the manufacturing sector [1].
- Although the tariff reductions are temporary, the agreement offers a chance for future negotiations leading to long-term resolutions to the trade disputes, including broadening market access and ensuring fairer trade practices [1][3].
In essence, China and the USA have agreed to a substantial tariff reduction of 24%, with a temporary reprieve on the imposed tariffs for 90 days and the retention of a 10% baseline tariff. Elimination of certain retaliatory tariffs and non-tariff measures is also part of the agreement, setting the stage for further negotiations. This marks a promising development in easing the prolonged trade confrontation between the two major economic powers.
- The Commission has also been consulted on the draft budget concerning the recent agreement on temporary tariff relief between China and the USA.
- This reduction in tariffs is significant for the business and finance industries, as it could potentially reinvigorate trade between the two global economic powerhouses, China and the USA.
- The agreement in Geneva, after thorough political discussions, may also have positive implications for the general news landscape, depending on the outcomes of future negotiations on broader trade issues such as market access and fairer trade practices.
