China and the United States: Customs duties partially suspended for 90 days

The United States and China announced on Monday, May 12, that they would suspend most of the prohibitive tariffs they had imposed on each other for 90 days, marking a de-escalation in their trade war that has rocked the global economy. This suspension will take effect "by May 14," the world's two largest economies announced in a joint statement published after two days of negotiations in Geneva, which were closely watched by the entire world.

Concretely, the two camps agreed to suspend the 115 percentage point surcharges they had imposed on each other in recent weeks, as part of a bidding war initiated in April by Donald Trump, who denounced an unbalanced trade relationship in favor of China.

These decisions therefore temporarily reduce US tariffs on China to 30% and Chinese tariffs on the United States to 10%, while negotiations between the two countries continue, explained US Trade Representative Jamieson Greer at a press conference in Geneva.

The announcement of this truce immediately brought relief to financial markets, with the Hong Kong stock market, for example, jumping more than 3% within minutes of the joint statement being published. Meanwhile, the dollar, which had suffered from the trade war, recovered against the yen and the euro.

"Neither side wants a dissociation" of their economies, said US Treasury Secretary Scott Bessent in Geneva on Monday. "We want a more balanced trade relationship," he added, arguing that the customs barriers put in place in recent months had effectively imposed an "embargo" on trade between the two countries.

The reduction of these customs duties is "in the common interest of the world," commented the Chinese Ministry of Commerce on Monday, welcoming "substantial progress" in trade negotiations with Washington.

The truce announced Monday is the result of two days of negotiations in Geneva between, on the American side, Scott Bessent and Greer, and, on the Chinese side, Chinese Vice Premier He Lifeng.

This meeting was the first face-to-face meeting between senior officials from both countries since Donald Trump imposed a 145% tariff on goods from China in early April, on top of existing tariffs. Beijing, which has promised to fight the tariffs "to the bitter end," retaliated with 125% tariffs on American products.

The negotiations in Geneva took place with "great respect" and their outcome shows that "neither side wants an economic break," Scott Bessent said on Monday. Both countries "have an interest in having balanced trade, and that's what the United States will be working towards," he added, calling on China to "open up to more American goods."

He Lifeng reported on Sunday "significant progress" after two days of talks that he described as "frank, in-depth and substantive." On Sunday, the White House welcomed what it called a new "trade agreement" with China, without giving further details.

According to the joint statement, the two countries further agreed to "establish a mechanism to continue discussions on trade and economic relations."

The trade war between Beijing and Washington has shaken global financial markets and fueled fears of inflation in the United States and an economic slowdown. "These discussions mark a significant step forward and, we hope, bode well for the future," World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala said on Sunday after meeting He Lifeng. "This progress is important not only for the United States and China, but also for the rest of the world, especially the most vulnerable economies."

The negotiations took place behind closed doors at the residence of the Swiss representative to the United Nations, a luxurious villa nestled on the left bank of Lake Geneva. The meeting in Geneva came two days after Donald Trump unveiled a trade agreement with the United Kingdom, the first concluded since he imposed more or less prohibitive tariffs on all countries.