U.S. and China agree to roll back tariffs

After months of stalemate, the U.S. and China have agreed to roll back tariffs on each other’s goods for 90 days. According to The National, the unexpected de-escalation, announced on May 12, has buoyed global stock markets and oil prices.

Following negotiations in Geneva, Switzerland, the two economic giants released a joint statement touting “substantial progress” and recognizing the “importance of a sustainable, long-term, and mutually beneficial economic and trade relationship.”

The mutual tariff revision will take effect by May 14, lowering U.S. levies on Chinese goods from 145 percent to 30 percent, while the 125 percent tariffs imposed by China on U.S. goods will be cut to 10 percent. Notably, the reprieve does not include Trump’s 20 percent fentanyl-related levies on China, imposed in February and March.

Sector-specific tariffs in areas such as medicine, semiconductors, and steel will also be subject to further negotiations.

U.S. Treasury Secretary Scott Bessent has claimed this was all part of a strategic rebalancing plan. Having once projected a more defiant position, demanding the complete removal of the tariffs, Beijing’s sudden accommodation reveals the damage the tariffs have wrought on key Chinese industries. Chinese factory activity, for instance, contracted at its fastest pace in 16 months in April.

As for America, the country’s gross domestic product showed its first quarterly contraction since early 2022.

“The consensus from both delegations this weekend is neither side wants a decoupling,” Bessent said. “And what had occurred with these very high tariffs … was the equivalent of an embargo, and neither side wants that. We do want trade; we want more balanced trade.”

While America maintains the deal unfolded as expected, Bessent himself recently sought to manage expectations of the talks, insisting that his goal was not “a big trade deal” but merely “de-escalation.”

Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong, was also surprised, claiming he expected the tariffs “would be cut to somewhere around 50%.”

Clearly, both countries are eager to ease the fallout, having faced combined losses of 600 billion dollars, disrupted supply chains, and layoffs.

Globally, the dispute has roiled financial markets and stoked fears of an international recession. Wall Street stock futures have climbed since the talks were announced as investors cheer on a possible détente.

The National/ Maghrebi