Tranquil Geneva sets the scene for China-US trade dispute harmony

Geneva — The US and China have agreed to temporarily slash reciprocal tariffs in a deal that surpassed expectations as the world’s two biggest economies seek to end a damaging trade war that has stoked fears of recession and roiled financial markets.

The US will cut extra tariffs it imposed on Chinese imports in April this year to 30% from 145% and Chinese duties on US imports will fall to 10% from 125%, the two sides said on Monday. The new measures are effective for 90 days.

The dollar rose and stock markets lifted after the news, which helped allay concerns about a downturn triggered last month by US President Donald Trump’s escalation of tariff measures aimed at narrowing the US trade deficit.

“Both countries represented their national interest very well,” US treasury secretary Scott Bessent said after talks with Chinese officials in Geneva. “We both have an interest in balanced trade, the US will continue moving towards that.”

Striking a conciliatory tone towards China, Bessent was speaking alongside US trade representative Jamieson Greer after the weekend talks in Switzerland in which both sides hailed progress on narrowing differences.

“The consensus from both delegations this weekend is neither side wants a decoupling,” Bessent said. “And what had occurred with these very high tariffs… was the equivalent of an embargo, and neither side wants that. We do want trade.”

The tariff dispute had brought nearly $600bn in two-way trade to a standstill, disrupting supply chains, sparking fears of stagflation and triggering some layoffs.

The Geneva meetings were the first face-to-face interactions between senior US and Chinese economic officials since Trump returned to power and launched a global tariff blitz, imposing particularly hefty duties on China.

Bessent said the deal did not include sector-specific tariffs and that the US would continue strategic rebalancing in areas including medicines, semiconductors and steel where it had identified supply chain vulnerabilities.

The accord went further than many analysts had expected after weeks of confrontational rhetoric on trade.

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

“Obviously, this is very positive news for economies in both countries and for the global economy, and makes investors much less concerned about the damage to global supply chains in the short term,” Zhang added.

Since taking office in January, Trump had hiked the tariffs paid by US importers for goods from China to 145%, in addition to those he imposed on many Chinese goods during his first term and the duties levied by the Biden administration.

China hit back by putting export curbs on some rare earth elements, vital for US manufacturers of weapons and electronic consumer goods, and raising tariffs on US goods to 125%.

Shares in European firms hit by the trade war rallied after the deal. Shipping company Maersk was the biggest gainer in Europe, up more than 12%. It warned last week that container volumes between the US and China had plunged due to the dispute.

Meanwhile, shares in luxury firms LVMH and Gucci-owner Kering were up 7.4% and 6.7% respectively.

US plane maker Boeing did not respond to requests for comment on how the deal would affect deliveries of aircraft to Chinese customers. In April, it said it was looking to resell potentially dozens of planes locked out of China by tariffs.

Wall Street stock futures climbed as the talks boosted hopes a global recession might be averted.

Trump gave a positive reading of the talks before they had concluded, saying the two sides had negotiated “a total reset… in a friendly, but constructive, manner.”

The president levied the tariffs in part after declaring a national emergency over fentanyl entering the US, and Greer said conversations over curbing the deadly opioid were “very constructive” though on a separate track.

US and Chinese officials met over two days at the Swiss UN ambassador’s gated villa overlooking Lake Geneva. Greer said many of the most challenging issues were settled outside, sitting on patio furniture beneath the shade of a tall tree.

“Having this setting, as opposed to a sterile hotel conference situation or conference rooms, I think, let us develop personal relationships with our counterparts and led to the successful conclusion,” he said.

Reuters