New Delhi: The United States and China on Monday agreed to drastically roll back tariffs on each other’s goods for an initial 90-day period. Each side has agreed to lower “reciprocal” tariffs on the other by 115 % points for 90 days. According to a joint statement through which the announcement was made, the US will temporarily lower its overall tariffs on Chinese goods from 145% to 30%. China will cut its levies on American imports from 125% to 10%.
This has de-escalated a punishing trade war and buoyed global markets. It comes after marathon trade negotiations in Geneva, Switzerland by officials from the world’s two largest economies.
Both sides recognize “the importance of a sustainable, long-term, and mutually beneficial economic and trade relationship,” they mentioned in the statement.
This development has brought cheers to global investors as the trade war sparked by US President Donald Trump’s massive tariffs seems to have found a resolution. Trump’s tariff had roiled financial markets, disrupted supply chains and stoked recession fears.
Here’s how markets react
Following the announcement, Dow futures jumped more than 2%, reported the CNN. S&P 500 futures rose nearly 3%, and the tech-heavy Nasdaq Composite futures went up by over 3.5% during Asian afternoon trading. Asian markets were higher too. Hong Kong’s Hang Seng index gained more than 3%.
The mutual tariff revisions will be imposed by May 14, reports stated. US President Donald Trump’s 20% fentanyl-related levies on China, imposed in February and March, will, however, stay.
The trade war has already affected the US and Chinese economies. America’s gross domestic product showed its first quarterly contraction since early 2022. China’s exports to the US fell sharply last month, impacting the country’s enormous manufacturing industry. Chinese factory activity contracted at its fastest pace in 16 months in April. This led to Beijing’s urgent efforts to roll out fresh economic stimulus.
