The US and China have reached a significant agreement to pause their escalating trade war, with both sides agreeing to drastically reduce tariffs over the next 90 days. The unexpected development has boosted investor confidence, leading to major stock market gains. Under the agreement, US duties on Chinese goods will be lowered from 145% to 30%, while China’s retaliatory tariffs on US imports will be reduced from 125% to 10%.
China also removed a ban on airlines taking delivery of Boeing planes. President Donald Trump hailed the talks as a step forward in the bilateral relationship, but China’s responses indicate that Beijing is still angry and blames the US for the trade conflict. Chinese President Xi Jinping accused the US of “bullying” and stated that there are no winners in trade wars.
The tariff war has significantly impacted Chinese traders and manufacturers, with shipments grinding to a halt and jobs at risk.
Trade war de-escalation boosts markets
Some companies have already shifted their focus away from the US to domestic or other Asian markets.
Chinese officials and state media are presenting the deal as a vindication of Beijing’s negotiating strategy, arguing that their resolute public stance played a crucial role in striking the deal with relatively few concessions. They claim that China’s firm countermeasures and resolute stance have been highly effective. On Chinese social media, views on the agreement are split.
Some users are celebrating the deal as a victory for China, while others are more cautious and sarcastic about the outcome. The measures agreed to in Geneva formally take effect on Wednesday, but Beijing has been quietly granting exemptions for some companies operating locally ahead of the talks. The two sides are expected to meet again within the next few weeks to negotiate a more comprehensive agreement.
