US-China Strike 90-Day Tariff Truce: What It Means for Global Trade and India.png)
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New Delhi, May 12 (The Trending People): In a significant development in the global trade landscape, the United States and China have agreed to a temporary rollback of tariffs for a 90-day period starting May 14, 2025. This move marks a dramatic shift from the tense trade war atmosphere that has loomed over global markets since the early years of Donald Trump’s presidency.
The Deal: What Has Been Agreed?
US Treasury Secretary Scott Bessent announced in Geneva that the two economic superpowers had agreed to reduce their respective tariffs substantially. The United States will slash tariffs on Chinese goods from a steep 145% to a more moderate 30%, while China will lower its tariffs on US goods from 125% to just 10%.
Both sides termed the move as a “reciprocal reduction” of around 115% in respective tariff loads, signalling a de-escalation in trade tensions. The agreement was signed during high-level trade talks that also included discussions on other contentious issues such as the fentanyl crisis and economic decoupling.
Who’s Talking?
Representing the US side were Treasury Secretary Scott Bessent and United States Trade Representative Jamieson Greer. China's representative for the continuing discussions will be He Lifeng, Vice Premier of the State Council.
The deal also includes a mechanism for future bilateral trade consultations, to be held alternately in China, the US, or a neutral third country.
Why Now?
This agreement comes amid increasing economic uncertainty globally and growing domestic concerns in both nations. The US currently faces a ballooning $1.2 trillion goods trade deficit, which the Biden administration hopes to reduce through this temporary relief. Greer noted that “differences were not as large as maybe thought,” hinting at behind-the-scenes alignment on common goals.
The Fentanyl Factor
Interestingly, the discussions also touched on the illegal fentanyl trade—an issue that has severely impacted American communities. Both nations agreed on the need to curb the flow of fentanyl, showing a rare moment of alignment in an otherwise tense relationship.
Impact on Global Markets
Markets around the world responded positively to the announcement. The Dow Jones surged by 400 points in early trade, while Asian markets, including the Sensex and Nikkei, recorded significant gains. Analysts believe the 90-day truce could serve as a cooling-off period that paves the way for a more stable global trading environment.
What This Means for India
India, which has been caught in the crossfire of US-China tensions, may stand to benefit. Reduced global volatility could help Indian exports, especially in sectors like electronics, textiles, and pharmaceuticals. It may also lead to softer commodity prices and help the Reserve Bank of India (RBI) manage inflation better.
Furthermore, with both economic giants easing trade restrictions, India might find new opportunities to play a larger role in global supply chains—a priority for the Indian government under its 'Atmanirbhar Bharat' policy.
Caution Ahead
While the truce is being welcomed globally, it’s important to note that it is temporary. A 90-day window is short, and without structural changes, the underlying trade issues between the US and China remain unresolved. There’s also skepticism about whether long-term commitments will follow.
Conclusion: A Step, Not a Solution
This deal marks an important, if cautious, step towards stabilising one of the most critical bilateral relationships in the world. For countries like India, it offers a short-term window of opportunity to strategise trade and investment policies. But all eyes will be on what follows after the 90 days.
