Pause on trade war as China, US slash tariffs

The US and China will temporarily lower tariffs on each other's products in a dramatic ratcheting down of trade tensions that buys the world's two largest economies three months to work toward a broader agreement.

- Agencies

The combined 145% US levies on most Chinese imports will be reduced to 30% including the rate tied to fentanyl by May 14, while the 125% Chinese duties on US goods will drop to 10%, according to a joint statement and from officials in a briefing Monday in Geneva.

US President Donald Trump said he will likely speak to Chinese leader Xi Jinping later this week following the talks. "I'll speak to President Xi, maybe at the end of the week," Trump said at the White House on Monday. "They've agreed to open China, fully open China. And I think it's going to be fantastic for China. I think it's going to be fantastic for us, and I think it's going to be great for unification and peace," he added.

Treasury secretary Scott Bessent, in a Bloomberg TV interview, on Monday said that both sides agreed "we do not want a generalised decoupling." "The US is going to do a strategic decoupling in terms of the items that we discovered during Covid were of national security interests — whether it's semiconductors, medicine, steel," he said.

The dollar jumped over 1% against a basket of major currencies, as the yen and Swiss franc fell along with other safe-haven assets like gold and government bonds.

US stocks soared, with the benchmark S&P 500 index rising 3% in afternoon trading, while the tech-heavy Nasdaq Composite jumped 4%.

China's commerce ministry said the two sides agreed to cancel 91% in tariffs on each other's goods and suspend another 24% in tariffs for 90 days, bringing the total reduction to 115 percentage points.