The two sides will roll back most of the tariffs they imposed on each other, backing away — at least for now — from a complete divorce of the world’s two largest economies.
“The consensus from both delegations this weekend is neither side wants a decoupling,” said US Treasury Secretary Scott Bessent, who led the Americans in two days of negotiations with Chinese officials in Geneva.
Advertisement
The truce “serves the interests of both nations as well as the common interests of the world,” China’s Commerce Ministry said in a statement.
Why it matters: It was a rare moment when the fierce rivals openly acknowledged their mutual dependence on bilateral trade.
“We concluded that we have a shared interest,” Bessent said. “We want more balanced trade. And I think that both sides are committed to achieving that.”
What that new balance will look like remains to be seen. But investors were nonetheless thankful the Americans and Chinese were at least willing to keep talking.
- The Standard & Poor’s 500 index surged 2.6 percent in early trading, while the tech-heavy Nasdaq rose 3.8 percent.
Step back: The agreement marked the latest concession by President Trump, whose April 2 “Liberation Day” tariffs convulsed the global economy. But China was also looking for an opportunity to de-escalate.
Advertisement
Despite his iron grip on the country, Chinese leader Xi Jinping could ill afford the long-term loss of trade with its largest export market. China’s US exports fell 21 percent in April from a year earlier.
Trump, however, was arguably under more pressure as American business leaders and investors complained loudly that tariffs would reignite inflation and stall economic growth. He had already paused many duties on other countries.
- During the truce, US tariffs on Chinese products will fall to 30 percent from the current 145 percent. China sold $439 billion in goods to the United States in 2024.
- China will reduce its tax on US imports to 10 percent from 125 percent. The country bought $143.5 billion in US goods last year.
In a notable win for Trump, China also said it would suspend or cancel restrictions on the export of seven rare earth metals that are crucial to US manufacturers, lifting retaliatory measures imposed after April 2.
Final thought: “There’s still a very steep hill to climb to get a real agreement,” Jamie Cox of Harris Financial Group told Bloomberg.
“The good news is that this pause gives US companies more time to adapt and to plan for contingencies should the trade talks go sideways again.”
We’ll take the good news, even if it’s only temporary.
Larry Edelman can be reached at larry.edelman@globe.com.