U.S. and China Announce Ninety Day Halt to Tariffs

What Happened?

The United States and China have agreed to pause nearly all tariffs for ninety days so that trade negotiations may be conducted. U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer said Monday that following weekend talks in Geneva with a Chinese delegation led by Vice Premier He Lifeng, U.S. tariffs on Chinese goods would be reduced from 145 to 30 percent. In turn, Beijing announced it would reduce blanket tariffs on American products from 125 to 10 percent. 

The tariff reductions are scheduled to take effect Wednesday.

Why it Matters

The agreement to pause tariffs is a positive step for the world’s two largest economies. The escalating trade war between China and the U.S. had generated fears of a global recession. During the ninety-day tariff reduction period, trade negotiations between the U.S. and China will take place, though specifics on those talks are still forthcoming.

A joint statement released by the White House and China’s Ministry of Commerce said that the two countries had agreed on the 90-day pause in the ‘spirit of mutual opening, continued communication, cooperation, and mutual respect.’

Despite political differences, the economies of the U.S. and China need trade with each other. Trade is advantageous for both countries because each has certain goods they can produce more cheaply and efficiently than the other, and trading allows both economies to benefit. 

A pause in tariffs and an agreement to continue negotiations is not a new trade agreement, but rather a step towards one. Even though a long-term deal has still not been reached, global markets reacted positively to the news of the tariff pause. Yet even as stocks rose on the news of a tariffs pause, many companies were forced to reckon with an uncertain future.

Elaine Li, head of Greater China at Atlas Ways, which offers services for Chinese enterprises’ global development, provided some insights into the ways companies are addressing market volatility and the potential for tariffs to continue. Saying, ‘To be honest, many Chinese companies no longer believe that tariffs will remain unchanged. For businesses, the best they can do is build a moat around their company before the next round of tariffs arrives.’

What exactly it means to ‘build a moat around their company’ remains to be seen. But firms are likely to take steps to try to insulate themselves from further volatility from tariffs which may rise or fall unexpectedly in the future.

How it Affects You

The pause in tariffs is long enough that suppliers in the United States may soon resume shipments of goods from China that had been put on hold. That would have a ripple effect on the economy, from increasing activities at ports like Los Angeles, to providing more work for freight companies because of the additional shipments to deliver. The tariff pause could halt increasing prices, but whether it will be enough to give consumers relief is unknown.