US, China Reach Temporary Deal to Slash Tariffs to 30%, 10%

•How trade war halted $600 billion in bilateral trade 

•Financial markets agog, stocks jump

Emmanuel Addeh in Abuja

The US and China yesterday agreed to temporarily slash their steep tariffs on each other, sending global stocks and the dollar surging, as the world’s top two economies tapped the brakes on a trade war that had fed fears of a global recession.

Under the new deal, the US will cut extra tariffs it imposed on Chinese imports last month from 145 per cent to 30 per cent for the next 90 days, while Chinese duties on US imports will fall to 10 per cent from 125 per cent.

Financial markets cheered the reprieve in a conflict that had brought nearly $600 billion in two-way trade to a standstill, disrupting supply chains and triggering layoffs. Investors had also worried about stagflation, a toxic combination of high inflation and weak economic growth, a Reuters report said.

Wall Street stocks jumped and the dollar rose, while safe-haven gold prices fell as the news eased investor concerns that Trump’s trade war could crater the global economy.

Seeking to reduce the US trade deficit, Trump targeted countries worldwide with an array of tariffs, and levies on China were his most aggressive. Financial markets swooned, prompting him to pause most “reciprocal” tariffs on dozens of countries last month.

His erratic approach has rattled investors and weakened Trump’s approval ratings among US voters worried tariffs will lift prices on everything from toys to cars.

The remaining US tariffs on Chinese imports are still stacked atop prior US duties. Even before Trump took office in January, China was saddled with 25 per cent US tariffs he had imposed on many Chinese industrial goods during his first term, with lower rates on some consumer goods.

Monday’s announcement left these duties unchanged, along with tariffs of 100 per cent on electric vehicles and 50 per cent on solar products imposed by former Democratic President Joe Biden.

The accord does not include the “de minimis” exemptions for low-value e-commerce shipments from China and Hong Kong, which the Trump administration terminated on May 2, according to a source familiar with the negotiations.

The meetings were the first face-to-face interactions between senior US and Chinese economic officials since Trump returned to power.

China’s Vice Premier, He Lifeng, told reporters at China’s mission to the World Trade Organisation (WTO) on Sunday that the talks were “candid, in-depth and constructive.”

“The meeting achieved substantial progress and reached important consensus,” He said.

After Trump hiked tariffs on Chinese goods to 145 per cent, China hit back by putting export curbs on some rare earth elements, vital for US manufacturers of weapons and electronic consumer goods. Beijing raised tariffs on US goods to 125 per cent.

Shares in European firms hit by the trade war rallied after the deal. Shipping company Maersk was the biggest gainer in Europe, up more than 12 per cent. It warned last week that container volumes between the US and China had plunged due to the dispute.

“We hope it can lay the foundation for the parties to also reach a permanent deal that can create the long-term predictability our customers need,” Maersk said in a statement.

Treasury Secretary, Scott Bessent, told US media that much work remained to be done, and neither a place nor time for a next meeting had been set.

“Over the next 90 days, we have a mechanism to meet with the Chinese trade delegation,” he told MSNBC. “We will be discussing tariffs, non-tariff trade barriers, currencies and their subsidies of labour and capital, and how we can open up China to American businesses,” he noted.

He said Chinese officials had understood the importance of addressing the fentanyl crisis and for the first time appeared to be working to halt the flow of precursor drugs into the US.