US, China Reduce Tariffs on Each Other’s Goods for 90 days

US and China have agreed to a temporary ceasefire in their ongoing trade war. America has agreed to cut import duties on many Chinese goods coming to America to 30%, for a period of 90 days. China has agreed to cut down import duties on American goods to 10% for the 90-day period. The reduction in tariffs from both sides is around 115%. Both sides announced that they would establish a mechanism to continue further discussions on the trade relationship between them.

Data Source: Office of US Trade representative

Bessent Says Both Countries Have an Interest in Balanced Trade

US Treasury Secretary Scott Bessent held trade talks with Chinese Vice-Premier He Lifeng this weekend in Geneva, Switzerland. While announcing the reduced tariffs for 90 days, Secretary Bessent said, “Both countries represented their national interests very well. We both have an interest in balanced trade, the US will continue moving towards that.” The emphasis on balanced trade by US Treasury Secretary indicates to the high trade deficit that US currently has with China. In 2024, trade deficit of US in its trade with China stood at $295.4 billion.

US President Donald Trump had imposed tariffs as high as 145% on Chinese goods coming to America. China had retaliated by imposing 125% tariffs on American goods. An extended trade war between the two countries can result in a global economic recession. It would have a ripple effect where other countries would also get adversely impacted.

China’s Economy Already Reeling from High US Tariffs

China’s economy had already started reeling from the impact of higher tariffs. Its PMI for manufacturing came down to 49 in April from 50.5 in March. A reading below 50 indicates to contraction of manufacturing in the month.

A number of American companies, such as Apple , Nike etc. have their manufacturing bases in China. Their goods manufactured in Chinese plants would also face higher US tariffs. There is pressure from these companies on American administration to reconsider the decision of such high tariffs on Chinese goods. One objective of US government in imposing high tariffs on Chinese goods is to make American companies shift their manufacturing back to USA from China.

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Source: https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china