Closing post
Time to recap, after a day in which peace broke out in the trade wars.
Global stock markets are rallying after the US and China slashed tariffs for 90 days in a de-escalation of the two country’s trade war.
In a surprise move this morning, the US and China both agreed to cut the tariffs imposed in the last month by 115 percentage points, in a 90-day pause. The move lowers the US tariff on Chinese goods from 145% to 30% (including a 20% levy as part of the US fentanyl crisis) with China’s tariff on US goods dropping from 125% to 10%.
Announcing the agreement in Geneva this morning, following talks with China, US treasury secretary Scott Bessent said neither side wanted a decoupling.
Bessent added:
“We do want trade, we want more balanced trade, and I think that both sides are committed to achieving that.”
Bessent later told Bloomberg that it was implausible that the US tariff on China could be cut below 10% in a final deal – while the 34% originally announced on 2 April (before the two sides sank into tit-for-tat retaliation) was a likely ceiling.
China’s commerce ministry said the agreement reached with the US was an important step to “resolve differences” and “lay the foundation to bridge differences and deepen co-operation”.
Donald Trump hailed a “total reset” in relations between China and the US after the countries agreed a 90-day pause to the deepening trade war that has threatened to upend the global economy, with reciprocal tariffs to be lowered by 115 percentage points.
“They’ve agreed to open up China,” the US president claimed at a press conference at the White House on Monday morning, having spent months escalating tensions with Beijing by ratcheting up tariffs on the country’s exports.
Analysts welcomed the breakthrough, while warning that a ceasefire did not necessarily mean a lasting peace between the US and China also trade. There are also concerns that the US economy has been damaged by the weeks of trade conflict with other countries.
One strategist said that Trump had ‘blinked’, and like a typical bully had backed down when someone hit him back.
Stocks are rallying in New York, where the Dow Jones industrial average is now up 891 points, or 2.1%, at 42,141 points.
In Europe, shares in German carmakers rallied amid hopes of an easing in the trade war – although Bessent cautioned this morning that the EU had been slower to enter negotiations than the UK or Switzerland.
There were strong gains in China today too, where the CSI300 index jumped over 1% and Hong Kong’s Hang Seng gained 3%.
Donald Trump has revealed that he will speak to Chinese president Xi Jinping “maybe at the end of the week”.
The US president added:
“We have some other things we’re doing.”
Speaking in the Oval Office, Trump says the US “achieved a total reset with China” after “productive” talks in Geneva last weekend.
He says the agreement, which lowered US tariffs on China to 30% for 90 days, “doesn’t include [those] that are already on … on cars, steel, aluminum … or tariffs that may be imposed on pharmaceuticals”.
Our US Politics Live blog has all the details:
