The United States and China have agreed to significantly reduce tariffs on each other's goods for the next 90 days, marking a dramatic de-escalation in the long-running trade war between the world’s two largest economies.
From Wednesday, both nations will slash their tariffs by 115%, according to US Treasury Secretary Scott Bessent. This move will see US tariffs on Chinese imports fall to 30%, while Chinese tariffs on American goods will drop to 10%.
The current US tariff on Chinese imports is 145% - while China charges a 125% tariff on some US goods.
"This agreement is a critical step forward," Bessent said in Washington, following intensive trade talks held over the weekend in Geneva. He had previously acknowledged the economic standoff had become unsustainable.
BBC business correspondent Theo Leggett described the scale of the cut as “bigger than expected,” but noted that a 30% US tariff still represents a significant trade barrier.
China had long maintained a defiant stance as US tariffs spiralled, hitting back with its own steep levies and vowing not to back down.
"This country can take the pain of an economic war with America – to an extent," said one official, citing China’s status as the lead trade partner for more than 100 countries.
But recent signs of economic strain have shifted the tone in Beijing. Officials have grown increasingly concerned about the impact of tariffs on an economy already grappling with a property crisis and high youth unemployment.
Factory output has slowed, and reports suggest some companies have begun laying off workers as production lines for US-bound goods grind to a halt.
China’s commerce ministry welcomed the agreement, calling it an important step to “resolve differences” and “lay the foundation to bridge differences and deepen cooperation.”
Such conciliatory language from Beijing would have been unthinkable just a month ago.
Still, there was a sting in the tail. The ministry concluded its statement with a subtle rebuke: “We hope the US side will continue to work with China to thoroughly correct the practice of unilateral increases.”
The 90-day truce is widely seen as a test period. Both sides have signaled intentions to continue talks, but major hurdles remain before a lasting resolution can be achieved.