US and China take a step back from sky-high tariffs, agree to pause for
90 days
[May 12, 2025] By
JAMEY KEATEN, DAVID McHUGH, ELAINE KURTENBACH and KEN MORITSUGU
GENEVA (AP) — U.S. and Chinese officials said Monday they had reached a
deal to roll back most of their recent tariffs and call a 90-day truce
in their trade war for more talks on resolving their trade disputes.
Stock markets rose sharply as the globe's two major economic powers took
a step back from a clash that has unsettled the global economy.
U.S. Trade Representative Jamieson Greer said the U.S. agreed to drop
its 145% tariff rate on Chinese goods by 115 percentage points to 30%,
while China agreed to lower its rate on U.S. goods by the same amount to
10%.
Greer and Treasury Secretary Scott Bessent announced the tariff
reductions at a news conference in Geneva.
The two officials struck a positive tone as they said the two sides had
set up consultations to continue discussing their trade issues. Bessent
said at the news briefing after two days of talks that the high tariff
levels would have amounted to a complete blockage of each sides goods,
an outcome neither side wants.
“The consensus from both delegations this weekend is neither side wants
a decoupling,” Bessent said. “And what had occurred with these very high
tariff ... was an embargo, the equivalent of an embargo. And neither
side wants that. We do want trade."
"We want more balanced trade. And I think that both sides are committed
to achieving that."
China’s Commerce Ministry said the two sides agreed to cancel 91% in
tariffs on each other’s goods and suspend another 24% in tariffs for 90
days, bringing the total reduction to 115 percentage points.
The ministry called the agreement an important step for the resolution
of the two countries’ differences and said it lays the foundation for
further cooperation.
“This initiative aligns with the expectations of producers and consumers
in both countries and serves the interests of both nations as well as
the common interests of the world,” a ministry statement said.
China hopes the U.S will stop “the erroneous practice of unilateral
tariff hikes” and work with China to safeguard the development of their
economic and trade relations, injecting more certainty and stability
into the global economy, the ministry said.
The joint statement issued by the two countries said China also agreed
to suspend or remove other measures it has taken since April 2 in
response to the U.S. tariffs.
China has increased export controls on rare earths including some
critical to the defense industry and added more American companies to
its export control and unreliable entity lists, restricting their
business with and in China.
[to top of second column] |
U.S. Trade Representative Jamieson Greer, left, and U.S. Secretary
of the Treasury Scott Bessent take part in a press conference after
two days of closed-door discussions on trade between the United
States and China, in Geneva, Switzerland, Monday, May 12, 2025.
(Jean-Christophe Bott/Keystone via AP)
 The full impact on the complicated
tariffs and other trade penalties enacted by Washington and Beijing
remains unclear. And much depends on whether they will find ways to
bridge longstanding differences during the 90-day suspension.
But as trade envoys from the world’s two biggest economies blinked,
finding ways to pull back from potentially massive disruptions to
world trade and their own markets, investors rejoiced.
Futures for the S&P 500 jumped 2.6% and for the Dow Jones Industrial
Average was up 2%. Oil prices surged more than $1.60 a barrel and
the U.S. dollar gained against the euro and the Japanese yen.
Jens Eskelund, president of the European Union Chamber of Commerce
in China, welcomed the news but expressed caution. The tariffs only
were suspended for 90 days and there is great uncertainty over what
lies ahead, he said in a statement.
“Businesses need predictability to maintain normal operations and
make investment decisions. The chamber therefore hopes to see both
sides continue to engage in dialogue to resolve differences, and
avoid taking measures that will disrupt global trade and result in
collateral damage for those caught in the cross-fire," Eskelund
said.
Trump last month raised U.S. tariffs on China to a combined 145% and
China retaliated by hitting American imports with a 125% levy.
Tariffs that high essentially amount to the two countries boycotting
each other’s products, disrupting trade that last year topped $660
billion.
The announcement by the U.S. and China sent shares surging, with
U.S. futures jumping more than 2%. Hong Kong’s Hang Seng index
surged nearly 3% and benchmarks in Germany and France were both up
0.7%
The Trump administration has imposed tariffs on countries worldwide,
but its fight with China has been the most intense. Trump’s import
taxes on goods from China include a 20% charge meant to pressure
Beijing into doing more to stop the flow of the synthetic opioid
fentanyl into the United States.
The remaining 125% involve a dispute dating back to Trump’s first
term and comes atop tariffs he levied on China then, which means the
total tariffs on some Chinese goods can exceed 145%.
___
McHugh contributed from Frankfurt, Germany, Kurtenbach from Mito,
Japan, and Moritsugu from Beijing.
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