The long-running trade war between the US and China has entered a partial easing process with a temporary agreement reached in Geneva over the weekend . The parties agreed to reduce the high customs tariffs they have implemented mutually for 90 days. According to the statements of officials who participated in the talks, this period is intended to prepare the ground for a permanent trade agreement. The development in question has the potential to have a significant impact on global trade balances.
The US side decided to reduce the customs duty on products of Chinese origin from 145 percent to 30 percent. China, on the other hand, reduced the tariff on products imported from the US from 125 percent to 10 percent. These rates mean that the tax increases that started in April and brought the trade tensions between the two countries to a peak are temporarily suspended. However, the agreement does leave out some exceptions.
US-China deal is important for global economy
The “de minimis” exemption, which was repealed as of May 2, was not included in this new regulation. This change closed a loophole that allowed companies like Temu and Shein to bring low-value products into the US market tax-free. The US has made it clear that it will not back down on this issue. Therefore, small-scale e-commerce traffic is excluded from this reduction.
Speaking at a press conference in Geneva, US Treasury Secretary Scott Bessent stated that the two countries aim for a more balanced trade. Bessent clearly stated that the parties do not want to sever their economic ties. This statement was made specifically to show the US public that the process is being carried out on a constructive basis. The Chinese side also emphasized the need to keep communication channels open.
Although this tax reduction will be applied for a limited time, it provides significant breathing space for both countries. The uncertainty created by the trade war was straining both manufacturers and their supply chains. The temporary tax reduction may provide short-term relief, especially for companies operating in key sectors such as automotive, technology and agriculture. However, the question of whether this period will be sufficient for the parties to reach a long-term agreement has not yet been answered.
In addition, the conditions under which the parties can make concessions in terms of the future of the negotiations stand out as an important topic of discussion. While the US is making stricter demands on intellectual property rights and state-backed companies, China is looking for flexibility in terms of access to agricultural products and technology. How these mutual expectations will balance out will become clearer in the coming weeks. For now, there is only talk of a temporary compromise.
On the other hand, this development directly concerns not only Washington and Beijing, but also Europe, Asia and emerging markets. Since a large part of global value chains are shaped through these two countries, the impact of the decision will therefore have repercussions far beyond bilateral trade. Many countries hope that a solution will be found without opening the door to a new global trade crisis.
However, it remains unclear whether such temporary agreements can evolve into a sustainable solution. If a permanent agreement is reached between the parties, it is expected that the new tax regulations will be tied to clearer and longer-term rules. This could mean a more predictable trading environment for international companies. However, whether or not that stage will be reached depends largely on diplomatic will.
This temporary reduction by the US and China is not limited to tax rates; it is also seen as a critical step in terms of reestablishing commercial communication. The course of the process will become clearer with the steps to be taken in the coming months. If the agreement becomes permanent, it could be a balancing factor not only for the two countries but also for the entire global economy.
