Speaking to reporters in Geneva after concluding discussions with his Chinese counterparts, US Treasury Secretary Scott Bessent confirmed the agreement, stating that both nations had committed to a 90-day pause on further trade measures. More significantly, Bessent announced that tariffs would be reduced by over 100 percentage points, bringing them down to a baseline rate of 10 percent.
"Both countries represented their national interest very well," Bessent commented on Monday. "We both have an interest in balanced trade, the US will continue moving towards that." His remarks underscored a sense of mutual understanding and a shared objective of fostering a more equitable trade relationship.
The immediate aftermath of the announcement saw positive reactions in financial markets. The US dollar strengthened against major currencies, and global stock markets experienced an uplift. This positive sentiment reflects a collective sigh of relief, potentially alleviating concerns about an imminent economic downturn that had been exacerbated by the previous administration's escalating tariff measures aimed at reducing the US trade deficit.
Bessent was accompanied by US Trade Representative Jamieson Greer during the press briefing, following the weekend discussions held in Switzerland. Both officials conveyed a sense of progress in bridging the existing differences between the two economic powerhouses.
"The consensus from both delegations this weekend is neither side wants a decoupling," Bessent emphasized, addressing concerns about a potential fracturing of the deeply interconnected global supply chains. "And what had occurred with these very high tariffs ... was the equivalent of an embargo, and neither side wants that. We do want trade." This statement suggests a recognition from both sides of the detrimental effects of excessively high tariffs on bilateral commerce.
The Geneva meetings marked the first direct, face-to-face engagement between senior US and Chinese economic officials since the return to power of a leader who had previously initiated a global tariff campaign, with China being a primary target. Since assuming office in January, tariffs on goods imported by the US from China had been significantly elevated, compounding duties imposed during his earlier tenure and those implemented by the subsequent administration.
China had responded to these escalating tariffs with retaliatory measures, including the imposition of export restrictions on certain rare earth elements – crucial components for US manufacturers in sectors like defense and consumer electronics – and by raising tariffs on US goods to 125 percent.
This protracted tariff dispute had effectively brought nearly $600 billion in two-way trade to a standstill, causing significant disruptions to global supply chains, raising fears of stagflation (a combination of slow economic growth and high inflation), and leading to some job losses in affected industries.
The news of the tariff reduction has injected a renewed sense of optimism into financial markets. US stock futures surged as the outcome of the Geneva talks fueled hopes that a global recession might be averted.
“This is better than I expected. I thought tariffs would be cut to somewhere around 50 percent,” remarked Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong, highlighting the unexpectedly significant scale of the agreed-upon reductions. “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, underscoring the potential for a positive ripple effect across the global economic landscape.
Following the Sunday talks, US officials characterized the outcome as a "deal" aimed at reducing the US trade deficit, while their Chinese counterparts described it as an "important consensus" and announced the establishment of a new economic dialogue forum between the two nations.
Prior to the conclusion of the talks, the US president had offered a positive assessment, stating that the two sides had negotiated “a total reset… in a friendly, but constructive, manner.”
The imposition of tariffs by the US had been partly justified by citing a national emergency related to the influx of fentanyl into the United States. US Trade Representative Greer indicated that discussions regarding curbing the flow of this deadly opioid were also "very constructive" but were being pursued on a separate track from the broader trade negotiations.
Chinese Vice Premier He Lifeng, while less definitive in his pronouncements, still hailed "substantial progress" following the discussions, which took place at the private residence of the Swiss ambassador to the United Nations overlooking Lake Geneva, suggesting a diplomatic setting for these crucial economic negotiations.