The United States and China met in Switzerland this weekend.
It has now been announced that the tariffs each country has imposed on the other have been slashed by more than half.
From Nick Edser’s article for the BBC:
The US and China have agreed a deal that will significantly cut the import tariffs they have imposed on each other, in a major de-escalation of their trade war.
US Treasury Secretary Scott Bessent said both countries would lower their reciprocal tariffs by 115% for 90 days.
Under the new agreement, the US and China have both suspended all but 10% of their Liberation Day tariffs for 90 days and cancelled other retaliatory tariffs.
This will cut US tariffs on Chinese imports to 30%, while Chinese tariffs on US imports will be cut to 10%. The pause will begin on 14 May.
The US measures still include an extra 20% component aimed at putting pressure on Beijing to do more to curb the illegal trade in fentanyl, a powerful opioid drug.
What does this mean? It means that China is being allowed the opportunity to “save face” by appearing to be an equal negotiating partner in what, it certainly appears, is going to be a negotiated settlement that makes trade between China and the USA far more favorable to the USA than it has been for decades.
Why is this happening? For exactly the reason Donald Trump said it would happen: because we are the single most important market for goods in the world, and other countries – especially China – need us one hell of a lot more than we need them. So they either make a deal with us or lose the most important trading partner they have.
And you can bet that as the China negotiations continue, dozens of other countries will run, not walk but run, to create similarly more USA-favorable deals. Either that or allow themselves to be non-competitive/priced out of our market.
Bottom line: if this plays out the way it is moving, it will be a complete justification of, and edification for, Trump’s tariff strategy. And an immense boon to the United States.
I can’t wait to hear how what’s left of Chuck Schumer and Nancy Pelosi try to convince us this was Joe Biden’s doing……
