US-China tariff war: In a significant move towards de-escalation, China on Wednesday announced the suspension of certain non-tariff measures targeting 17 US firms listed in its “unreliable entity list” and 28 others on its export control list. The Chinese Commerce Ministry stated this decision was part of a broader trade truce reached with Washington after days of high-level negotiations in Geneva.
Major tariff cuts by both sides
As part of the agreement, the United States has reduced tariffs on Chinese imports to 30%, while China has brought down its tariffs on American goods to 10%, a massive reduction of over 100 percentage points in some cases. These changes took effect just after midnight on Wednesday in Washington, signaling a pause in the tit-for-tat tariff war that had previously pushed rates to 145% (US) and 125% (China).
US President Donald Trump, speaking to Fox News on Tuesday, claimed that the US now has a “very, very strong” trade framework with China. He emphasized the potential of China opening its markets to American businesses, calling it the most promising outcome of the ongoing talks.
Economic impact
Markets responded positively. Prices for growth-dependent metals like copper, aluminium, and zinc surged, with benchmark copper on the London Metal Exchange hitting its highest price since April 2 at $9,664 per metric ton. The trade truce has improved investor sentiment, at least temporarily, after months of market instability.
Fentanyl trade
Despite this pause in tariff escalation, the fundamental issues remain unresolved. A key sticking point is the US accusation that China enables the export of fentanyl-related chemicals—a charge Beijing denies. This issue contributed to the US imposing an additional 20% levy over the base tariffs.
Meanwhile, analysts warn that this 90-day reprieve is not a resolution. The risk of renewed tensions remains if both sides fail to make tangible progress. “The trade war is not over,” an analyst noted. “The underlying issues are complex, and without resolution, this could just be a temporary calm before another storm.”
(With Reuters inputs)