The United States and China have agreed to a temporary truce in their intensifying trade battle. The United States has reduced its taxes on Chinese imports to 30% from 145%. China, in response, is reducing its tariffs on US imports to 10% for the next 90 days.
This unexpected softening stems from a closed-door agreement reached in Geneva. Both countries recognized that the prolonged trade conflict was inflicting significant damage to their supply networks and overall economic relations.
Treasury Secretary Scott Bessent described the meetings as "very productive." He also credited the neutral location with creating a nice atmosphere.
The decision tries to halt the economic bleeding caused by President Trump's tit-for-tat tariff rises. The situation began in April when he raised tariffs on Chinese imports, forcing Beijing to respond with its sanctions. The following trade war caused a dramatic drop in bilateral trade, placing pressure on businesses and executives in both countries.
While the 90-day tariff cut gives immediate comfort, it is not a long-term solution to the underlying trade conflicts between the two economic heavyweights. Nonetheless, it provides much-needed relief for firms and consumers impacted by the trade conflict.
