US-China trade talks: Goods tax rate reduced to 10%

This is an effort by the world's two largest economies to cool down a prolonged trade war that has raised concerns about the risk of recession and destabilized global financial markets.

US Treasury Secretary Scott Bessent said after talks with Chinese officials that the two sides had agreed to suspend tariffs for 90 days, reducing existing tariffs by more than 100 percentage points to a base rate of 10%.

Both countries have effectively defended their national interests and are aiming for a balanced trade relationship. The statement helped the dollar gain against major currencies and helped calm markets that have been rattled since President Donald Trump re-ignited the tariff war last month.

Speaking alongside US Trade Representative Jamieson Greer, Mr. Bessent said both sides agreed that neither side wanted an “economic embargo.”

He likened the recent high tariffs to an embargo, which neither side wants. Instead, both the US and China want to maintain normal trade activities.

The meeting in Geneva marked the first time senior economic officials from the two countries have spoken directly since Mr Trump returned to the White House and launched a wave of global tariffs, with China the biggest target with many high tariffs.

Since the start of his second term in January, Mr. Trump has increased tariffs on Chinese imports to 145%, not counting tariffs imposed during his first term and measures taken by the previous Biden administration.

In response, China imposed export restrictions on some rare earth elements, which are vital to the US defense and electronics industries, and raised tariffs on US goods to as much as 125%.

The tariff war between the US and China has brought nearly $600 billion in bilateral trade to a virtual halt, disrupting global supply chains, raising fears of a recession and inflation and leading to some layoffs.

However, after signs of an easing in tensions, financial markets reacted positively. Stock futures on Wall Street rose on hopes of avoiding a global recession.

Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong, said he was surprised by the outcome of the talks, as he had initially expected tariffs to be reduced by about 50%. He said it was a positive sign not only for the two countries’ economies but also for the global economy, and eased investors’ concerns about short-term supply chain disruptions.

After the meeting on Sunday, the US side confirmed that the two sides had reached an agreement to reduce the US trade deficit. Meanwhile, China said that the two countries had reached “important consensus” and would launch a new economic dialogue forum.

US President Donald Trump sounded an upbeat note even before the talks ended, saying the two sides had had a “complete reset” in a friendly but constructive atmosphere.

Mr Trump’s tariffs were imposed in part after he declared a national emergency over the dangerous drug fentanyl flooding into the US. US Trade Representative Jamieson Greer said the talks on fentanyl control were constructive, although separate from the trade talks.

Chinese Vice Premier He Lifeng also sounded a more cautious note, but still hailed “significant progress” after the talks, which took place at the Swiss ambassador’s private villa on Lake Geneva.