The Trump administration and China have reached an agreement to reduce tariffs for the next 90 days in an effort to ease tensions in their trade war. This marks a temporary step back for President Donald Trump, who had previously defended the steep tariffs on Chinese imports. The deal was announced following negotiations in Geneva between top economic officials from both sides. Trump emphasized that if a final agreement is not reached within 90 days, tariffs could be raised again, but not back to their previous levels. The agreement includes a reduction in tariffs on both sides and a commitment from China to cut back on retaliatory measures and the flow of fentanyl to the U.S. It does not, however, cover the existing tariffs on automobiles, auto parts, steel, and aluminum. The stock market reacted positively to the news of the tariff reduction, with the Dow surging.
The Dow Jones Industrial Average surged by over 1,000 points, a 2.5% increase. The S&P 500 and tech-heavy Nasdaq also saw significant gains. Recent fluctuations in the stock market have been attributed to the uncertain nature of Trump’s tariff policies with China.
During negotiations in Geneva, China announced that an “important consensus” had been reached. Both sides agreed to establish a China-U.S. economic and trade consultation mechanism to guide future discussions.
The talks between the U.S. and China will continue as efforts are made to address the trade imbalances. President Trump indicated a willingness to lower tariffs on Chinese imports by 80%, but ultimately a more substantial reduction was agreed upon.
Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer held a news conference in Geneva to announce the progress made during the closed-door meetings.
The significant tariffs imposed by both countries had disrupted around $600 billion in annual trade. Trump has been vocal about achieving more balanced trade and addressing the trade deficit with China.
Critics, including top Democrats, have expressed concerns that China may have gained an advantage in the negotiations. Trump’s decision to pause reciprocal tariffs on China has been met with mixed reactions.
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