The US and China will pause their tariff war after “substantial progress” during weekend talks between senior diplomats, prompting gains in global stock markets.
However, US president Donald Trump has hinted at another possible seismic trade policy announcement, signalling that he could change the way the US purchases pharmaceutical products.
90-day reduction
According to a joint statement, both China and the US will cut their tariffs rate substantially for 90 days.
US imports into China will still face a 10% tariff, with a 30% rate applying to Chinese exports the other way.
These numbers are down from 125% and 145%, respectively. The tariff rates had increased substantially over the last few weeks, as both Beijing and Washington DC exchanged blows in their trade war.
Important steps
US Treasury secretary, Scott Bessent, said:
“I’m happy to report that we made substantial progress between the US and China in the very important trade talks. We will be giving details tomorrow, but I can tell you that the talks were productive.”
Chinese vice premier, He Lifeng, said “substantial progress” was made in the negotiations, which took place in Geneva, Switzerland.
He added that they represented an “important step” to resolve the differences between the two nations, and that a mechanism for economic and trade consultations would be established.
US trade representative, Jamieson Greer, said “China was the only country that chose to implement retaliation” to Trump’s measures, referring to the reciprocal tariff policy announced last month.
The reciprocal tariffs also remain paused, after a 90-day delay was announced 9 April.
‘Positive’ but ‘unchanged’
He said that all other measures the US placed on China would “remain unchanged for now”, including measures applied during Trump’s first administration.
Greer said a “positive path forward” on tackling the smuggling of the illegal drug fentanyl had also been reached. The White House had used the fentanyl issue as one of the pretexts for hitting China, Mexico and Canada with tariffs earlier this year.
The drug has been blamed for the deaths of thousands of Americans and the devastation of communities across the US. Then-president Joe Biden had agreed a deal with Beijing during his term in office.
Markets react
Global stock markets rose on the news. The S&P 500 jumped by 3%, while the Nikkei and FTSE 100 saw smaller gains.
Shares in the shipping companies Maersk and Hapag-Lloyd also leapt by over 10%. The price of gold fell by 3% after the announcement, while oil futures rose by 2.5%.
Pharma measures
Despite the news of a pause, Trump appeared to remain committed to his tariff policy, claiming without evidence that “trillions of dollars” are pouring into the US as a result of his administration’s measures in a post on social media.
He also said that, at 9am US time, he would be signing an executive order on pharmaceutical products that he claimed would “almost immediately” reduce prices by 30-80% for US consumers .
“I will be instituting a MOST FAVORED NATION’S POLICY [sic] whereby the US will pay the same price as the Nation that pays the lowest price anywhere in the World.”
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