US and China agree 90-day pause – to cut tariffs by 115%
Newsflash: the US and China have agreed to lower tariffs on each other’s goods substantially for 90 days, following their negotiations last weekend.
Speaking in Geneva, treasury secretary Scott Bessent says that “both sides will move their tariffs down by 115%”, having agreed a 90-day pause.
That’s a significant de-escalation in the trade war that blew up last month. Before today, the US had lifted its tariff on China to 145% (including the 20% tariff added to tackle fentanyl imports into the US), with Beijing having retaliated with 125% tariffs on US imports.
Bessent tells reporters that “both sides showed great respect” during their talks, and that “we both have an interest in balanced trade”.
Key events
The US side also suggest that they have agreed a “very good mechanism” to avoid unfortunate escalations with China over trade in future.
Asked about the details of the new tariffs between the US and China, trade ambassador Jamieson Greer explains that today’s agreement is based on the reciprocal tariff which was imposed by the United States on 2 April, and the escalatory steps which followed by each side.
He says the Chinese side and the US side ended up at 125% on each other’s imports. “That has all come down by 115% to 10% each”, Greer says (in the 90-day pause announced this morning).
In addition, the US imposed 20% related to fentanyl, Greer points out (which is why the US total tariff level was reported at 145%). That levy, imposed by Donald Trump to encourage China to reduce the flow of fentanyl into the US, is on its own track.
So, the US reciprocal tariff on imports from China is dropping to 30% under the deal agreed last weekend, while China’s levy drops to 10%.
However, there are also “sector-specific” tariffs which the US charges on imports of, for example, steel and cars.
Scott Bessent reveals that “the upside surprise for me from this weekend” was the level of Chinese engagement on the fentanyl crisis in the US.
Lots of praise from Bessent on this, too .. GREER: ‘FENTANYL’ TARIFF TALKS ON CHINA ON ‘POSITIVE’ TRACK
— Ozan Korman Tarman (@ozanktarman) May 12, 2025
Bessent also suggests there is a possibility of agreeing purchase agreements with China, that could help lift the US trade deficit with China “into balance”.
Scott Bessent says there was a consensus from both the US and China delegations at last weekend’s talks that “neither side wants a decoupling”.
Bessent adds that the US wants more balanced trade; he thinks both sides are committed to achieving that.
US and China agree 90-day pause – to cut tariffs by 115%
Newsflash: the US and China have agreed to lower tariffs on each other’s goods substantially for 90 days, following their negotiations last weekend.
Speaking in Geneva, treasury secretary Scott Bessent says that “both sides will move their tariffs down by 115%”, having agreed a 90-day pause.
That’s a significant de-escalation in the trade war that blew up last month. Before today, the US had lifted its tariff on China to 145% (including the 20% tariff added to tackle fentanyl imports into the US), with Beijing having retaliated with 125% tariffs on US imports.
Bessent tells reporters that “both sides showed great respect” during their talks, and that “we both have an interest in balanced trade”.
Treasury secretary Scott Bessent and US trade representative Jamieson Greer are about to hold a press briefing now in Geneva, to discuss last weekend’s talks with China….
Iron ore prices have risen too, after the US and China reported progress in their trade talks.
The benchmark June iron ore contract on the Singapore Exchange is up 2.2%, to around $99 per tonne.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange was up 1.5% earlier this morning, Reuters reports.
There are reports that US treasury secretary Scott Bessent will hold a briefing on the trade talks within the hour, in Geneva.
Bessent to brief on trade talks at 8am London time
— Michael Brown (@MrMBrown) May 12, 2025
Oil, a gauge of global growth prospects, has risen more than 1% today after the US and China both touted progress at their trade talks.
Brent crude, the international benchmark, has risen by 80 cents per barrel to $64.75/barrel, the highest level since 29 April.
China’s trade representative, vice commerce minister Li Chenggang, told reporters that what was agreed at the weekend of talks with the US in Geneva will be worth the wait.
Li explained:
“As we say back in China, if the dishes are delicious, the timing doesn’t matter,”
“Whenever it gets released, it will be good news for the world.”
Introduction: Stocks rise as US and China report progress in trade talks
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
A sigh of relief is sweeping global markets today, after the US and China both reported they made progress at a weekend of talks in Switzerland over the trade war.
Stocks have risen across Asia-Pacific markets, while safe-haven asset gold has dipped, on hopes of de-escalation in the trade war gripping the global economy.
The two sides have promised to release details about what was agreed later today, after both issuing encouraging statements on Sunday after the talks wrapped up.
Last night, the White House announced a “China Trade Deal” had been reached in Geneva.
Treasury secretary Scott Bessent described the talks as ‘productive’, saying yesterday:
“I’m happy to report that we made substantial progress between the United States and China in the very important trade talks. First, I want to thank our Swiss host. The Swiss government has been very kind in providing us this wonderful venue, and I think that led to a great deal of productivity we’ve seen. We will be giving details tomorrow, but I can tell you that the talks were productive.
US trade representative ambassador Jamieson Greer said it was a “very constructive two days” of talks, adding that “perhaps the differences were not so large as maybe thought”.
For Beijing, Vice Premier He Lifeng said the China-U.S. high-level meeting on economic and trade affairs were “in-depth, candid and constructive”.
He explained that the two countries have agreed to a new “trade consultation mechanism”.
That “mechanism” suggests a warming in relations between the two sides, who ratcheted up tariffs on each other’s goods last month, after Donald Trump announced his ‘“Liberation Day” levies on imports to the US.
🟢Chinese Vice Premier He Lifeng：The #China–#US high-level meeting on economic and trade affairs were in-depth, candid and constructive.
🟢The two sides have reached a series of major consensuses and have also agreed to establish an economic and trade consultation mechanism.… pic.twitter.com/o3s9kWdtlT
— Chinese Embassy in US (@ChineseEmbinUS) May 12, 2025
Markets have responded positively, even though neither side has yet released any specific details of possible points of agreement.
China’s CSI300 share index has risen 0.8%, while Hong Kong’s Hang Seng index is up 1.2%. Japan’s Nikkei has risen a more modest 0.3%. The futures market suggests the US markets will rally later today too.
Kyle Rodda, senior financial market analyst at capital.com, says:
It remains the case that there’s more style than substance when it comes to the trade policy narrative: not as much as a pledge to lower tariffs has been given, let alone a substantive and comprehensive deal. Nevertheless, what the US is touting as “productive” talks and Trump has labelled a “reset” is a clear statement of intent from the US to wind back existing tariffs.
The markets and negotiators are on the clock now to reach an agreement before the damage of existing tariffs begin to seriously weaken economic activity, especially in the US. So far, tariffs have had a negative but relatively modest impact on economic growth, with the labour market proving resilient and prices stable. Eventually, if the status quo remains, the levee will break and significant and hard to reverse damage will be done to the global economy.
We’ll hear from top central bankers in the UK today, as King’s College London hosts the annual Bank of England Watchers’ conference.
The agenda
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9:00am BST: Bank of England deputy governor Clare Lombardelli gives keynote speech at the Bank of England Watchers’ Conference 2025
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11:30am BST: Panel on the Monetary policy outlook including BoE policymaker Megan Greene
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17:00pm BST: Fire-side chat with BoE policymaker Alan Taylor
