In a surprising development, the United States and China have agreed to roll back tariffs on each other’s goods for an initial 90-day period, marking a significant breakthrough in their ongoing trade war.
Contents
- 1 A Step Toward De-escalation in the Trade War
- 2 Market Reactions to the Tariff Rollbacks
- 3 Key Details of the Tariff Rollback Agreement
- 4 Economic Impact of the Trade War
- 5 Experts Weigh In on the Agreement
- 6 Continuing Dialogue and Future Negotiations
- 7 A Shift in China’s Stance on Tariff Rollbacks
- 8 Looking Ahead
- 9 About H2T Finance
A Step Toward De-escalation in the Trade War
The roll back tariffs represents a major step in de-escalating the tensions that have defined the US-China trade war. Over the weekend, officials from both nations engaged in marathon negotiations, achieving what they called “substantial progress.” The move is seen as an important gesture towards fostering a sustainable, long-term, and mutually beneficial economic relationship between the US and China.
Market Reactions to the Tariff Rollbacks
Global markets reacted enthusiastically to the announcement. Major US stock index futures surged, with Dow futures rising more than 2%, S&P 500 futures gaining nearly 3%, and Nasdaq futures jumping over 3.5%. Asian markets mirrored this optimism, with Hong Kong’s Hang Seng index climbing over 3%.
This significant rollback of tariffs is expected to alleviate market uncertainty, which has been triggered by the previous trade conflict. The impact of the tariff war had been felt across global supply chains, causing disruptions and stoking fears of a global recession.
Key Details of the Tariff Rollback Agreement
The agreement to roll back tariffs includes a reduction in the US tariffs on Chinese goods from 145% to 30%. On the other hand, China will cut its tariffs on American imports from 125% to 10%. This temporary tariff reduction will be in place for 90 days, offering relief to businesses and consumers in both countries.
However, some tariffs, such as the 20% levies on fentanyl-related goods imposed by the US in February and March, will remain unchanged for now. The tariff rollback is expected to significantly improve trade relations and reduce the economic strain that both countries have been facing.
Economic Impact of the Trade War
The trade war has already left its mark on both economies. In the US, the first quarter of 2025 saw a contraction in GDP, marking the first decline since early 2022. This decline came as businesses rushed to import goods before the full impact of the high tariffs could be felt.
In China, the consequences of the trade war have been equally severe. Chinese exports to the US fell sharply last month, putting pressure on China’s manufacturing sector. In April, Chinese factory activity contracted at its fastest pace in 16 months, prompting the Chinese government to ramp up economic stimulus efforts.
Experts Weigh In on the Agreement
Dan Ives, a managing director at Wedbush Securities, described the tariff rollback agreement as a “best case scenario” for both sides. He believes that this is just the beginning of broader, more comprehensive negotiations, with the possibility of further tariff rollbacks in the coming months.
“Expect these tariff numbers to continue moving down as negotiations progress,” Ives said in a research note.
Continuing Dialogue and Future Negotiations
The US and China have also agreed to create a framework for continuing discussions on economic and trade relations. This mechanism will be led by high-level officials, including Chinese Vice Premier He Lifeng and US Treasury Secretary Scott Bessent. The discussions may take place alternately in China, the United States, or a third country.
Both sides emphasized their commitment to maintaining trade and balancing economic relations, with neither country wanting to sever ties or “decouple” entirely.
A Shift in China’s Stance on Tariff Rollbacks
China’s official response to the tariff rollback has been notably positive. A spokesperson for China’s Ministry of Commerce described the agreement as an “important step” toward resolving differences through dialogue and consultation. This marks a shift from China’s previous, more aggressive stance, where officials demanded the removal of all US tariffs before agreeing to sit at the negotiation table.
Looking Ahead
While the agreement to roll back tariffs is temporary, it represents a crucial turning point in US-China trade relations. Both sides are now focused on negotiating a more permanent resolution, and markets will be watching closely for any further developments.
As these trade discussions continue, investors and businesses alike hope that the roll back tariffs will lead to greater stability and open the door to more balanced trade relations in the future.
