“We have reached an agreement to temporarily suspend tariffs for 90 days and substantially reduce import duties. The retaliatory tariffs on both sides will be cut by an additional 115 percentage points,” said US Treasury Secretary Scott Bessent at a press conference on May 12.

The meeting also included US Trade Representative Jamieson Greer. In a joint statement released by the White House, the 24% import tax on Chinese goods under the retaliatory tariff order signed by President Trump on April 2 will be delayed for 90 days.

The base tariff of 10% remains unchanged. The 20% tariff on China, which is related to the trafficking of fentanyl into the US, also remains in place.

As a result, the total import tariff on Chinese goods will temporarily drop from 145% to 30%. Meanwhile, China will also remove some retaliatory tariffs imposed on US goods, reducing tariffs from 125% to 10%

Following Bessent's announcement, US stock futures surged. S&P 500 futures rose 2.8%, Nasdaq 100 jumped 3.6%, and Dow Jones Industrial Average (DJIA) futures climbed 2.3%.

Meanwhile, global gold prices dropped by as much as $100 per ounce, falling to $3,222.

Last weekend, US and Chinese officials met in Geneva, Switzerland, to discuss trade issues. After the meeting, the US announced that a deal had been reached to reduce its trade deficit with China. According to Chinese Customs data, the US trade deficit with China last year reached $361 billion.

On Xinhua, Chinese Vice Premier He Lifeng described the talks as in-depth, frank, and constructive. Senior Chinese officials also confirmed that both sides reached a series of key agreements and agreed to establish a mechanism for economic and trade consultations.

However, Tianchen Xu, a senior economist at the Economist Intelligence Unit (EIU), warned that achieving a comprehensive agreement "will take considerable time and may not yield the desired results," as both sides are reluctant to make concessions on strategic priorities.

“We believe it will be difficult for the US and China to achieve anything similar to the Phase One Trade Agreement from President Trump’s first term,” Xu noted.

China's Ministry of Commerce stated on May 12 that both sides committed to act in accordance with the agreement before May 14. Beijing will also take all necessary steps to delay or remove non-tariff barriers imposed on the US since April 2.

A joint announcement from both countries, published by Xinhua, stated that following the implementation of these actions, both parties would establish a mechanism to continue discussions on economic and trade relations. These talks may rotate between China and the US or be held in a third country if mutually agreed upon. When necessary, the two parties may also hold consultations on related economic and trade matters.

In January 2020, the two nations signed a deal after over a year of tense negotiations. The Phase One Trade Agreement, published by the White House, spans 86 pages and consists of 8 chapters.

It includes provisions on intellectual property protection in China, a commitment by China to purchase at least $200 billion worth of US goods and services over two years, and a pledge not to manipulate its currency. In return, the US agreed to reduce some tariffs on Chinese goods. However, China later failed to meet its purchasing targets due to the outbreak of COVID-19.

(Source: Vnexpress)

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