U.S. and China Achieve Tariff Reduction Agreement Amid Ongoing Trade Tensions

GENEVA (AP) — In a significant development for global trade, U.S. and Chinese officials announced on Monday that they have reached a preliminary agreement to reduce most existing tariffs, alongside a 90-day pause in their ongoing trade conflict. This decision comes as a relief to markets and indicates a movement towards resolving long-standing trade disputes.

Details of the Agreement

According to U.S. Trade Representative Jamieson Greer, the U.S. will decrease its tariff rate on Chinese goods from an aggressive 145% to a more manageable 30%. In a reciprocal gesture, China will lower its tariff on U.S. imports to 10%. These adjustments were revealed during a press conference held in Geneva by Greer and Treasury Secretary Scott Bessent.

Market Reactions

The announcement had an immediate positive impact on stock markets worldwide. U.S. futures experienced a surge of over 2%, while Hong Kong’s Hang Seng index rose nearly 3%. Additionally, major European indices in Germany and France reported increases of 0.7% each.

A Joint Desire to Avoid Decoupling

During the press briefing, Secretary Bessent emphasized the mutual desire of both nations to avoid a decoupling of their economies, which could have severe repercussions for global trade. He noted that the extremely high tariffs imposed earlier would have created a situation akin to an embargo, which neither country desires. “The consensus from both delegations this weekend is neither side wants a decoupling,” he stated.

The Background of the Trade War

The recent escalation of the trade conflict began when President Trump significantly increased tariffs on Chinese imports, a move that saw tariffs rise to a staggering 145%. In retaliation, China imposed a 125% levy on American goods. Such high tariffs were widely viewed as effectively boycotting each nation’s products, disrupting a trade relationship that saw exchanges surpassing $660 billion last year.

Looking Ahead

This momentous agreement highlights a shift toward negotiation rather than confrontation, as both nations continue consultations to address their trade issues. The aims are not only to resolve current disputes but also to establish a more balanced trade framework moving forward.

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