In a significant breakthrough to cool off simmering trade tensions, the United States and China have reached a mutual agreement to slash reciprocal tariffs, aiming to de-escalate a prolonged trade war that has rattled global markets for months. The development was first reported by news agency Reuters, following high-level discussions in Geneva.
US Treasury Secretary Scott Bessent confirmed the deal after closed-door negotiations with Chinese officials, stating that both countries had agreed to a 90-day suspension of additional tariffs. As part of the agreement, reciprocal tariff rates would be reduced by 115%. “We would like to see China more open to US goods,” Bessent said during a press briefing.
Key Tariff Reductions and Immediate Effects
According to estimates based on a statement from China’s Ministry of Commerce, Beijing will impose a 10% tariff on US imports, suspend an additional 24% in duties for the 90-day truce period, and completely remove an extra 91% in punitive tariffs.
Before the agreement, the US had imposed a hefty 145% tariff on Chinese imports, prompting China to retaliate with a 125% tariff on US goods and restrictions on the export of critical raw materials like rare earth elements. This trade conflict had escalated to the brink of a full-blown embargo between the world’s two largest economies, with global implications.
Behind the Scenes: Diplomatic Efforts
The breakthrough came after a weekend of intensive discussions between Bessent and China’s Vice Premier He Lifeng. Speaking to the media, Lifeng described the talks as “in-depth” and “candid,” hinting at a cooperative spirit moving forward.
The truce offers both nations a temporary window to re-evaluate trade priorities without further escalating tensions. It also provides breathing space for global businesses and markets that have been caught in the crossfire.
India’s Strategic Advantage Amid the Trade Shift
Interestingly, the ongoing trade war had already started to benefit India. With high tariffs making Chinese products less attractive, many US buyers had begun shifting their sourcing to Indian suppliers. This shift is expected to accelerate, providing Indian exporters a golden opportunity to fill the void.
Moreover, the geopolitical strain between Washington and Beijing has opened up new avenues for India to deepen its economic engagement with Western nations. Industry analysts believe that this could lead to stronger trade partnerships and long-term gains for the Indian economy.
China's Export Trends Signal Market Diversification
Despite the decline in exports to the US—down over 20% in April—China’s overall exports climbed 8.1% year-on-year, buoyed by increased trade with ASEAN countries and other global partners. This suggests that while US-China tensions continue to have a direct impact, Beijing has actively diversified its export markets to reduce its dependence on the US.
This 90-day truce marks a pivotal moment in the US-China trade narrative, offering temporary relief to global markets and economic stakeholders. While uncertainties remain, the willingness to negotiate signals a potential path forward. For India, the trade shift could be a historic chance to rise as a preferred alternative in global supply chains.
Stay tuned to The Trending People for more updates on this developing story.
