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By Kolawole Ojebisi
The United States and China have taken a significant step towards resolving the trade war between the two countries.
This is as the two largest economies in the world, on Monday, announced a joint agreement to dramatically slash reciprocal tariffs.
The officials of both countries stressed that Washington and Beijing seek to end a trade war that for months has upended the global economy and set financial markets teetering on the brink of collapse.
Speaking after talks with Chinese officials in Geneva, US Treasury Secretary Scott Bessent said the two sides had agreed on a 90-day pause on measures and that tariffs would come down by over 100 percentage points to a 10 percent baseline rate.
“Both countries represented their national interest very well,” Bessent said on Monday. “We both have an interest in balanced trade, the US will continue moving towards that.”
Meanwhile, observers have reported an immediate positive impact of the decision on the financial market.
They said the dollar rose against major currencies and markets lifted following the news, stressing that this development has allayed concerns about a downturn triggered last month by US President Donald Trump’s escalation of tariff measures.
Trump had said the aim was to narrow the US trade deficit but the move had the unintended consequence of setting the global financial market on edge while stoking fears of recession into the bargain.
But expressing confidence in what was achieved at the Geneva meetings on Monday, Bessent speaking alongside US Trade Representative Jamieson Greer hailed both sides 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.” he added.
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.
In what was described by economic analysts as “tit for tat” tariff, Trump hiked China imports tariff to 145% forcing the Asian country to come up with 125% retaliatory levy on US goods.
The tariff dispute brought nearly $600 billion in two-way trade to a standstill, disrupting supply chains, sparking fears of stagflation and triggering some layoffs.
Meanwhile, the just concluded talks have started eliciting reactions.
“This is better than I expected. I thought tariffs would be cut to somewhere around 50 percent,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong.
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