Groundbreaking Trade Developments With China

Following successful trade negotiations in Geneva, Switzerland, the United States and China agreed to suspend most of the tariffs imposed since April 2 and committed to a 90-day de-escalation as formal negotiations continue.

Both parties affirmed the importance of the bilateral economic and trade relationship between the United States and China and the global economy.

Speaking in Geneva, U.S. Trade Representative Jamieson Greer explained how ballooning U.S. trade deficits with China due to non-reciprocal trade led the Trump administration to impose a 34 percent reciprocal tariff on China.

“[T]he United States’ trade deficit has ballooned over the past several years, ending up at a $1.2 trillion deficit in goods as of the end of last year, which was an approximately 42 percent increase over a few years prior when there was an $850 billion trade deficit in the beginning of the Biden administration.”

China was the only country that chose to retaliate against the United States. This led to escalating rounds of tariffs to the point of creating an effective trade embargo, “which is not a sustainable practice for either side,” said Trade Representative Greer. That’s why both sides have agreed to a draw-down in tariffs:

“[W]ith this agreement, we come to agreement that our reciprocal tariff rate will go down to 10 percent on the United States side, so it goes down 115 percent. We enter into a 90-day pause period for negotiations, which both the Chinese and the United States are very committed to, and the Chinese on their side also go down 115 percent to 10 percent, and they remove the countermeasures that they have in place.”

Treasury Secretary Scott Bessent emphasized that this agreement provides the mechanism for continued progress on creating balanced trade with China:

“We would like to see China open to more U.S. goods. We expect that as the negotiations proceed, that there will also be a possibility of purchase agreements to pull what is our largest bilateral trade deficit into balance that has gotten out of balance.”

The “consensus from both delegations,” said Secretary Bessent, “is neither side wants decoupling. . . .We do want trade. We want more balanced trade. And I think that both sides are committed to achieving that.”