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Positive Economic Shockwave: U.S.–China Deal Slashes Tariffs and Revives Global Investment
In a surprising move that sparked a wave of optimism in global markets, the United States and China announced on Monday a temporary trade agreement to significantly reduce mutual tariffs for an initial period of 90 days. The deal also establishes a sustainable framework for ongoing economic and trade negotiations between the world’s two largest economies.
According to the joint statement issued after intensive weekend negotiations in Geneva, Washington will reduce tariffs on Chinese imports from 145% to 30%, while Beijing will cut tariffs on American goods from 125% to 10%. Additionally, both sides agreed to eliminate recently imposed retaliatory tariffs.
Permanent Negotiation Mechanism Established
The two countries also agreed to set up a permanent negotiation mechanism, led by Chinese Vice Premier He Lifeng on one side, and U.S. Treasury Secretary Scott Besant and Trade Representative Jamieson Greer on the other. Meetings will alternate between China and the U.S., or take place in a mutually agreed third country, with the possibility of holding technical consultations as needed.
In a press statement, Secretary Besant emphasized that the U.S. is not seeking to decouple economically from China but rather aims to open up Chinese markets to American goods. He also hinted at potential trade deals that could help reduce the U.S. trade deficit, though he did not address currency-related issues.
Immediate Market Impact
Following the announcement, European stock markets rallied as investors welcomed the breakthrough. However, the healthcare sector saw a 2.9% decline after former U.S. President Donald Trump announced plans to sign an executive order to lower drug prices, negatively impacting shares of major pharmaceutical companies such as Novo Nordisk, AstraZeneca, and Roche.
First Step Toward Ending the Trade War
This agreement comes after over a year of escalating trade tensions and tariffs between the two nations, which had threatened global economic stability. It is seen as a major diplomatic and economic breakthrough, potentially paving the way for a new era of mutual economic cooperation, provided both sides adhere to the agreed roadmap.
