US and China agree to slash tariffs for 90 days

The US and China have reached a deal to significantly reduce import tariffs, signaling a major step back from their ongoing trade war. Both nations agreed to cut reciprocal tariffs by 115% for 90 days, following high-level talks in Switzerland.

The agreement lowers US tariffs on Chinese imports to 30% and Chinese tariffs on US imports to 10%, starting May 14. Additionally, other retaliatory tariffs have been suspended. This pause provides temporary relief to strained economic relations while aiming to foster further dialogue.

The trade war had intensified last month with the US imposing steep tariffs on global imports, particularly targeting China, which retaliated in kind. The resulting tariffs reached as high as 145% on US imports to China and 125% on Chinese imports to the US.

US Treasury Secretary Scott Bessent emphasized the importance of this agreement in avoiding economic decoupling and fostering balanced trade. China's commerce ministry echoed similar sentiments, describing the deal as a foundation for deeper cooperation.

Financial markets responded positively, with major stock indices and shipping company shares rising. However, the gold price, often viewed as a safe-haven asset, declined by 3%.

The deal includes provisions addressing concerns like China's handling of intellectual property and its subsidies, as well as US pressure on Beijing to curb illegal fentanyl trade. Both sides have also agreed to establish a mechanism for ongoing economic discussions.

While this agreement offers a temporary reprieve, long-term resolutions on trade imbalances and structural issues remain essential for stabilizing global economic growth.