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The US and China have agreed to lower tariffs for the next 90 days in a major de-escalation of the trade war between the world’s two largest economies.
As part of an agreement hammered out in Geneva over the weekend, the US will lower tariffs on Chinese goods to 30 per cent from 145 per cent and China will reduce duties on US imports to 10 per cent from 125 per cent.
Global stocks extended their gains after the announcement, with S&P 500 futures up 2.8 per cent.
The US dollar rallied 0.7 per cent against a basket of its peer currencies while gold, a safe haven asset, fell 2.3 per cent.
“We want more balanced trade, and I think both sides are committed to achieving that,” Scott Bessent, US Treasury secretary, said at a briefing in Geneva on Monday. “Neither side wants a decoupling.”
Washington and Beijing have been locked in an escalating trade war since early April, when Trump lifted tariffs on Chinese imports and China imposed retaliatory duties.
The punitive duties have damaged trade between the countries, with Bessent acknowledging last month that the situation was unsustainable.
While the agreement marks just the first step towards reaching a more permanent deal, it represents the first sign of economic tensions easing between the two economic superpowers.
Bessent and US trade representative Jamieson Greer represented the White House in the Geneva talks, with Chinese vice-president He Lifeng leading Beijing’s delegation.
Ahead of the talks in Geneva, Bessent had warned that the level of tariffs between the US and China amounted to an effective trade “embargo”.
US business leaders, including JPMorgan chief executive Jamie Dimon, had in recent weeks urged Beijing and Washington to hold talks as signs of the economic damage from the stand-off mounted.
In a meeting with Trump, the chief executives of Walmart and Target warned the tariffs would lead to empty shelves in their stores.
But until recently there were few signs that either country was willing to negotiate, with Beijing officials accusing the US administration of bullying and vowing not to capitulate.
