US-China trade negotiations: Commodity 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 effectively defended their national interests and aimed to balance trade. The announcement boosted the dollar against major currencies and helped calm markets that have been rattled since President Donald Trump restarted 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 taxes.

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

In response, China imposed restrictions on exports of certain rare earth elements, which are vital to the US defense and electronics industries, and raised tariffs on US goods by up to 125%.

The tariff war between the US and China has nearly paralyzed the flow of bilateral trade worth nearly $600 billion, disrupting global supply chains, raising fears of a recession with inflation and leading to some layoffs.

However, after signs of easing tensions, financial markets reacted positively, with Wall Street stock futures rising 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, having initially expected the tariffs to be reduced by about 50%. He said this 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 announced that the two countries had reached “important consensus” and would launch a new economic dialogue forum.

US President Donald Trump sounded optimistic 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 implemented 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, though separate from the trade talks.

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