Relief for trade as US, China pull back on tariffs

In a development that has brought palpable relief to trade and economic circles, the US and China have hit the pause button on a debilitating tariff war that threatened to derail world trade, cripple supply chains, and push the world towards a potential recession.

- Dhirendra Kumar

Weekend talks at Geneva between top officials of the two countries saw the US agree to cut tariffs on Chinese goods from 145% to 30%. Likewise, China agreed to lower tariffs on US imports from 125% to 10%, according to a joint statement issued on Monday. However, key sectors such as steel, aluminum, and automobiles are not covered under this arrangement, with 25% tariffs remaining in effect for all US trade partners.

Further, the rolled-back tariffs are effective for 90 days starting Wednesday, a temporary window that aims to ease trade tensions and allow for further negotiations towards a more lasting agreement.

Ajay Srivastava, co-founder of New Delhi-based trade think-tank Global Trade Research Initiative (GTRI), said this effectively reopens the $660-billion US-China trade corridor and brings relief for strained global supply chains. "By rolling back some of the steepest tariffs, it allows trade to resume more freely between the two countries," he said.

However, given the transient nature of the truce, experts are waiting for details to find cues for what it could mean for India, even while initial feedback throws up mixed views on the unravelling of the China+1 strategy that India was banking on.