China, US Reach Temporary Agreement on Tariffs, Trump Calls the Move a ‘Total Reset’ on Trade
The United States and China have reached a tentative trade agreement that would see tariffs drastically lowered for at least 90 days.
Investors may have something to feel good about this week as negotiations between the United States and China appeared to signal a “thaw in the trade war” — and a possible easing of tariffs — between the two nations, according to CNN.
Following lengthy trade negotiations that took place in Geneva, Switzerland, over the course of the weekend, on May 12, officials from the U.S. and China announced a temporary halt of the reciprocal portion of tariffs imposed on one another, dropping 115 percentage points on both sides. This means that China will continue to hold levies on American imports — though reduced to just 10% from a former position of 125% — while the U.S. will slash its tariffs on Chinese goods from 145% to 30%.
These reductions will remain in place for 90 days, allowing time for further talks.
President Trump Talks Tariffs, Particularly Climbdown Regarding China
For his part, President Donald Trump — the leader responsible for imposing a raft of wide-ranging tariffs on a host of nations, China in particular — claimed that the impending deal represented a move forward on the trade file, with the administration having achieved a “total reset with China.”
“The best part of the deal,” Trump added, according to the BBC, is that “China agreed to open itself up to American business.”
Trump went on to describe the previous trade paradigm as one wherein China refused to “open their country to us,” despite the United States having opened itself to imports from China.
“It never made sense to me. It’s not fair,” Trump said.
In addition, the president mentioned that China is set to “suspend and remove all of its non-monetary [trade] barriers” upon formally signing the deal.
Markets Surge in Response to Reduction of US-China Tariffs
The reaction of the markets to news of a new trade agreement between the United States and China was decidedly positive, per CNBC.
The Dow Jones Industrial Average rocketed upward by 1,037 points (2.5%), while the S&P 500 gained almost 3%. The Nasdaq also showed strength, trending upward by 4%. The outlet cited Best Buy, Dell, Amazon, and Apple as seeing share prices improve by between 5% and 7% as a result of the announcement.
CNBC quoted UBS head of fixed income Kurt Reiman on the matter.
“We believe peak uncertainty over trade has passed, but market volatility is likely to stay,” Reiman wrote in a note covering the talks. “Our base case remains that the effective U.S. tariff rate (ex-China) will moderate toward 15% by year-end.”
