Business Reporter, BBC News
Getty imagesThe United States and China have agreed with a truce to reduce import taxes on goods exchanged between the two countries.
The agreement marks a major de-escalation of the trade war between the two largest economies in the world, which has sent shock waves impacting countless other countries, including the United Kingdom.
This is what all this means.
What was announced?
The United States and China both have confirmed a reduction in prices They were imposed following the initial escalation by President Donald Trump earlier this year.
The agreement implies that the two nations completely cancel certain prices and suspend others for 90 days on May 14.
The result is that the American prices on Chinese imports will drop from 145% to 30%, while Chinese prices on certain American imports will drop from 125% to 10%.
China has also stopped and rebuilt non-pricing countermeasuresLike the export of critical minerals to the United States, which he has set up in response to the initial climbing.
American measures always include an additional 20% component aimed at putting pressure on Beijing to make more to brake the illegal fentanyl trade, a powerful opioid medication.
The announcement came after the two countries had talks in Switzerland, the first between the two countries since Trump sparked the last tariff war.
What’s going on after 90 days?
Trying to predict the next stages of this current trade war between the United States and China in recent months has been difficult to say.
But this is a major agreement between the two power economies in the world and has been widely welcomed.
Even if the suspended prices are reintegrated after 90 days, because the vast majority of the prices that were announced after the cancellation of the Liberation Day, American prices on China would only have 54% and Chinese prices in the United States would increase to 34%.
However, the talks between the two governments should continue, so another agreement could be concluded.
US Secretary of the Treasury, Scott Bessent, said the consensus of the two countries was that “none of the parties wanted to decoupling”, while the Chinese Ministry of Commerce said that the agreement was a step to “lay the foundations to fill the differences and deepen cooperation”.
Thus, relations between the United States and China seem more friendly, but as we have seen so far during this presidency Trump, things can change quickly.
What goods do the United States and China exchange with each other?
In a word – a lot.
In 2024, the largest category of exported goods from the United States to China was soybeans – mainly used to feed the 440 million pigs in China. The United States has also sent pharmaceutical and oil products.
Meanwhile, China has exported large volumes of electronics, computers and toys.
The largest category of American imports from China is smartphones, representing 9% of the total. A large part of these Apple iPhone smartphones made in China.
However, the United States bought much more from China ($ 440 billion) that it does not sell it ($ 145 billion), which Trump has not been satisfied for a long time.
His reasoning in part for the introduction of prices, and the highest on countries that sell more in the United States than they buy, is to encourage American consumers to buy more American manufacturing products, increase the amount of increased tax and stimulate manufacturing jobs.
The climbing of trade war in recent months has led to a collapse of the number of goods sent through the Pacific Ocean, but investors think that the truce will lead to a rebound, with actions for some of the largest maritime companies in the world.
Have the two parties won?
Politicians on both sides have started and will undoubtedly continue to win this truce.
Although the United States and China call this a joint agreement, the inhabitants of Beijing will interpret it as the Trump administration which will return from the prices, according to Janka Oertel, director of the Asian program at the European Council on foreign relations.
“We are back to square one, negotiations can start.
The United States will argue that its rate of prices on Chinese imports, although lower, is still heavy at 30%.
“This trade agreement is a victory for the United States, demonstrating the unrivaled expertise of President Trump in the conclusion of transactions that benefit the American people,” a statement from the White House said.
Deutsche Bank economists have suggested lower prices, and The UK’s agreement last week on themmeans that there is both a probable ceiling and floor at Trump prices.
“The United Kingdom has one of the least unbalanced relations with the United States and now has a universal rate rate of 10%. China has one of the most unbalanced relations and now has a price rate of 30%,” George Saravelos, FX research in the investment bank said.
“It is reasonable that these two numbers have now established the limits of the place where the American prices will end this year.”
