USA and China surprise with agreement to cut rates

Temporary agreement between USA and China brings immediate relief to global markets, reversing part of the rates that threatened the economy

The United States and China government has announced a temporary deal to reduce reciprocal tariffs. The understanding surprised the market by exceeding expectations, at a time when the two largest economies in the world seek to end a trade war that had been feeding fears of recession and causing instability in financial markets.

According to a statement issued on Monday (12), the US will reduce extra tariffs applied to Chinese imports in April this year from 145% to 30%. Chinese US products will fall from 125% to 10%. The new measures come into force immediately and are valid for 90 days.

Markets react positively to the ad

After the announcement, the dollar was valued and the stock markets climbed, helping to calm fears of economic slowdown last month after US President Donald Trump further raise tariffs to reduce US commercial deficit.

“The two countries have defended their national interests very well,” said Scott Bessent, US Treasury Secretary after conversations with Chinese authorities in Geneva. “We are both interested in a balanced trade, and the US will continue to walk in that direction.”

Bessent adopted a conciliatory tone from China. He spoke alongside US commercial representative Jamieson Greer after weekend meetings in Switzerland, where both parties highlighted advances in the negotiations.

No way wants the total breakdown of trade relations

“The consensus achieved this weekend is that neither side wants a decoupling,” said Bessent. “Very high rates have created a situation equivalent to an embargo, and that doesn’t matter to anyone. We want trade.”

The tariff dispute had paralyzed nearly $ 600 billion in bilateral trade, impairing supply chains, generating concerns with stagflation – combination of economic stagnation and high inflation – and causing layoffs in strategic sectors.

First face -to -face dialogue from Trump’s return to power

The meetings in Geneva have marked the first face -to -face contact between high economic employees from the US and China since Trump resumed the presidency and launched a wide global tariff offensive, especially against China.

Bessent explained that the agreement does not include sector -specific rates and that the US will continue with the strategic process of rebalancing in areas such as medicines, semiconductors and steel, where it identified vulnerabilities in its supply chains.

The understanding was considered broader than many analysts expected, given the previous weeks marked by aggressive discourses on both sides.

Analysis: Measure brings relief to global trade

“This is better than I expected. I thought the tariffs would be cut up to about 50%,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong.

“Clearly, this is a very positive news for both the economies of both countries and the global economy, and greatly reassures investors and damage to short -term global supply chains,” he added.

Previous Scenario: Trump climbing and Chinese retaliation

Since taking office in January, Trump has increased by US importers paid on Chinese products to 145%, adding to those already applied during his first term and those imposed by the Biden Administration.

In response, China has imposed restrictions on exporting some rare land-essential inputs for US weapon and electronics manufacturers-and raised US products to 125%.

European companies breathe relieved with the agreement

The shares of European companies hit by the trade war recovered land after the announcement. Maersk (Maerskb.CO), the Danish company of logistics, led the gains in Europe, up more than 12%. The previous week, the company had warned that the volume of containers between USA and China plummeted because of the dispute.

Meanwhile, the actions of luxury groups such as LVMH (LVMH.PA) and Kering (PRTP.PA), owner of Gucci, rose 7.4% and 6.7%, respectively.

Boeing avoids commenting immediate impact

American manufacturer Boeing did not respond to requests for declaration on how the agreement would affect aircraft deliveries to Chinese customers. In April, the company was considering reselling dozens of planes prevented from entering China due to tariffs.

New York Bolsa Futures also rose, with the renewed optimism that a global recession can be avoided.

Trump made a positive reading of negotiations even before his end, saying that the sides negotiated “a complete reset … in a friendly but productive way.”

Fentanil and informal environment were also highlights in conversations

The US president justified part of the imposition of tariffs based on a declared national emergency on the entry of illegal fentanil in the country. According to Greer, conversations about containing the use of opioid were “very constructive”, although treated on another front.

The meetings between authorities took place for two days at the residence of UN Swiss Ambassador, overlooking Lake Geneva. Greer pointed out that complex issues were resolved outdoors, sitting on garden furniture under the shadow of a tall tree.

“This scenario, instead of a cold conference room or an impersonal hotel, allowed us to develop personal relationships with our peers and contributed to the success of the agreement,” he concluded.