BarcelonaThe United States and China announced a series of agreements on Monday to ease trade tensions between the two countries, including a partial suspension of their most recent reciprocal tariffs for 90 days. According to a joint statement released at the close of a new round of talks held in Geneva, Beijing will reduce tariffs on US products from 125% to 10% over the next three months, while Washington will cut its taxes on Chinese goods from 145% to 30% for the same period.
The two powers have also agreed to establish a permanent consultation mechanism, which represents the most tangible gesture of détente since the start of the current tariff escalation. The new dialogue mechanism will be led by Chinese Vice Premier He Lifeng; US Treasury Secretary Scott Bessent; and US Trade Representative Jamieson Greer, and will meet in China, the United States, or a third country.
The White House announced in a statement on Sunday that a trade agreement had been reached with the Asian giant. Senior representatives from both administrations met this weekend for the first time since the escalation of the trade war. However, it wasn't until Monday that the details were revealed. Aside from the announced measures, Greer explained that both countries have directly addressed the fentanyl consumption crisis in the US for the first time and asserted that China has understood the "magnitude" of the problem.
US President Donald Trump said on Monday that the relationship with China is "very good," following the closing of an agreement to lower mutual tariffs, and announced that he would speak with his Chinese counterpart Xi Jinping "perhaps this weekend." "We're not looking to harm China. China was suffering great damage. They were closing factories. There was a lot of instability, and they were very happy to be able to do something with us. The relationship is very, very good. I will speak with President Xi perhaps at the end of the week," Trump told reporters at the White House.
Also in statements after the agreement was detailed, Bessent stated that both the US and China understand they have a shared interest in balanced trade. "The consensus over the last two days has been that neither side wants a decoupling (of trade) and that what happened with such high tariffs is equivalent to an embargo, and nobody wants that," he reflected. The trade war between the two powers intensified since April with the imposition of new reciprocal tariffs, which raised taxes to unprecedented levels: 145% for Chinese products and 125% for American ones.
This weekend's agreement represents, at least temporarily, a further step than what US President Donald Trump had been proposing in recent days, who had raised the possibility of reduce tariffs in China from 145% to 80%"An 80% tariff on China seems like the right thing to do," he said on his social media platform, Truth Social. Ultimately, the percentage will drop to 30%. Trump also demanded that, in exchange for the tariff reduction, China open its market to the US. "China should open their market to the US, it would be great for them! Closed markets don't work anymore!" the Republican wrote.
Attack in Europe
And after the de-escalation of the trade war with China, Trump once again turned his attention to Europe and focused on the pharmaceutical sector. Trump has threatened to impose tariffs on pharmaceutical imports if they do not lower drug prices. In an appearance on Monday, Trump presented a proposal to implement a "most-favored-nation policy." According to him, the United States will pay for medicines the "same price as the nation that pays the lowest price in the world." "The United States will stop subsidizing other countries' health care," he said, without clarifying how he will force companies to lower prices.
The Trump administration blames the European Union for the high cost Americans pay for medicines. "The EU is worse than China in many ways," Trump said. In the midst of trade negotiations between Washington and Brussels, the US president has again criticized the lack of access to the European agricultural market, where stricter regulations on food safety exist.
The US stock market soars, the dollar gains value, and oil prices rise.
Chinese stock markets closed higher after China and the United States announced the trade pact. Hong Kong's benchmark Hang Seng Index soared 2.98%. On the mainland, all markets closed moments before the document was released, but the Shanghai and Shenzhen stock markets rose 0.82% and 1.72%, respectively.
The main US stock indices opened trading on Monday with strong gains, following the announcement of a 90-day truce in the implementation of most of the tariffs announced between the United States and China, which allowed the Dow Jones and Nasdaq to surpass their pre-close levels on April 2. The announcement of the "liberation" and tariffs in most countries.
The Dow Jones Industrial Average rose 2.65% after the bell rang, reaching 42,345 points, the Nasdaq climbed more than 4%, reaching 18,674 points, and the S&P 500 rose 2.9%, reaching its previous high of 2.9%.
The oil market, after the declines of recent months, was also moving higher, with a barrel of Brent crude, the benchmark for Europe, rising to $66.29 on Monday, almost 4% above last week's close and the highest price since late April. A barrel of West Texas Intermediate (WTI), the benchmark for the U.S., reached $63.41.
The euro's exchange rate against the dollar weakened to $1.1083 on Monday, a one-month low, down 1.4% from last week's levels.