US, China agree to slash tariffs in trade war de-escalation

WASHINGTON, May 12: The United States and China announced Monday an agreement to drastically reduce tit-for-tat tariffs for 90 days, sending financial markets soaring after weeks of turmoil over fears about their impact on the global economy.

After their first talks since US President Donald Trump launched his trade war, the world's two biggest economies agreed in a joint statement to bring their triple-digit tariffs down to two figures and continue negotiations.

Stock markets, which tumbled after Trump unleashed global tariffs, rallied on the announcement with major Wall Street indexes rocketing early Monday. The broad-based S&P 500 surged 3.0 percent.

US Treasury Secretary Scott Bessent described weekend discussions with Chinese Vice Premier He Lifeng and international trade representative Li Chenggang as "productive" and "robust" with both sides anticipated to meet again soon.

"Both sides showed a great respect," Bessent told reporters.

Trump's fresh duties on many imports from China came up to 145 percent this year, compared to 10 percent for other countries in the global tariff blitz he launched last month.

Beijing hit back with duties of 125 percent on US goods.

The United States agreed to lower its tariffs on Chinese goods to 30 percent while China will reduce its own to 10 percent.
Bessent told CNBC Monday that he expects United States and Chinese representatives to meet again in the coming weeks to work out "a more fulsome agreement."

While Washington does not want broad decoupling from China, it seeks "a decoupling for strategic necessities" that the country had trouble obtaining during the Covid-19 pandemic, Bessent said.

He added to CNBC that the purpose of the 90-day pause was also to see what the United States could do about non-tariff barriers weighing on US firms. 

China hailed the "substantial progress" made at the talks, which were held at the discreet villa residence of Switzerland's ambassador to the United Nations in Geneva.

This move "is in the interest of the two countries and the common interest of the world," the Chinese commerce ministry said, adding that it hoped Washington would keep working with China "to correct the wrong practice of unilateral tariff rises."    �"AFP