Can tariff battle pause bring end to US-China trade war?

The United States and China have announced an agreement on trade tariffs after two days of talks in Geneva. What does this mean for Donald Trump’s tariff policy and global trade?

- MARY DEJEVSKY

What is the agreement?

Both countries will drastically slash import tariffs on each other’s goods, with US tariffs on Chinese goods falling to 30 per cent and China’s tariffs on US goods to 10 per cent. This leaves quite a discrepancy, but the US rates are nothing like the unilateral 145 per cent on Chinese goods previously announced by Donald Trump in respect of what he regards as China’s unfair trading practices, or the 125 per cent tariff that was China’s response. The reductions are to take effect tomorrow and last for 90 days, the intention being to create space, and “a mechanism” for new talks on longer term economic and trade arrangements.

How big a deal is it?

The significance of the agreement should not be underestimated; China and the US are the two biggest economies in the world, and imports from China accounted for $438.9bn (£332bn) last year, leaving a deficit in China’s favour of $295.4bn.

But neither should it be overestimated. This is essentially a holding operation, for 90 days, after which it could expire should there be no progress. International markets have greeted it in a universally positive light.

Where did it come from?