The US and China agreed on Monday to temporarily slash so-called reciprocal tariffs and respective countermeasures by 115% to 10%, Kallanish reports.

The announcement made in Geneva states that both countries will pause these tariffs for 90 days to continue negotiations towards “rebalancing trade.” A baseline 10% tariff rate will remain in place in both countries during the period. Other US tariffs on Chinese goods have also been retained, including the 20% rate related to fentanyl, US officials say in a press conference.

Additionally, China will suspend or remove the non-tariff countermeasures taken against the US since 2 April, which include export restrictions.  

Their joint statement states that the trade talks in Geneva between China’s Vice Premier He Lifeng and US treasury secretary Scott Bessent and US trade representative Jamieson Greer created a “mechanism to continue consultations on economic and trade relations.”

The deal recognises the importance of bilateral economic and trade relations to both countries and the global economy. It also considers the need for a “sustainable, long-term and mutually beneficial economic and trade relationship.” The countries have agreed to continue advancing negotiations “in a spirit of mutual openness, continuous communication, cooperation and mutual respect.”

Bessent says that it became clear that “neither side want decoupling,” while noting Washington wants China to open for more US goods. He also indicates potential purchase agreements to help balance trade, stating that the US massive trade deficit with China stems from negligence by previous US administrations.

China’s commerce ministry notes that this round of talks has attracted great attention from the international community. Vice Premier He says Beijing is willing to work with the US to “inject more certainty and stability into the world economy.”

Other existing US tariffs on certain sectors, including a 25% tariff on cars and auto parts, remain in place. It’s unclear when a new round of talks will take place.

Analysts at ING say the trade war de-escalation is a “win-win” as it benefits both economies. Yet, they believe the agreement, “which significantly lowers tariffs without any concessions, is likely to be viewed as a particular victory for China.”

“This was a larger-than-expected de-escalation and represents an upgrade to the outlook, though the negotiation process will likely remain challenging,” they add.